Closing a business is rarely as simple as turning off the lights and walking away. Whether you are shutting down due to a change in direction, burnout, a new opportunity, or because the business has run its course, there are legal and tax steps that must be handled properly.
Miss them, and you can end up with unexpected tax bills, compliance issues, or letters from the Australian Taxation Office (ATO) long after you thought it was all done.
Here are my top seven things that need to be done to wrap things up properly.
1. Process final pays and super for employees
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If you have employees, there are strict obligations when closing a business. You must process final pay runs, pay out accrued leave entitlements, calculate and pay termination payments, and ensure superannuation is paid correctly and on time. Final payslips and reporting obligations must also be completed.
You will also need to lodge the Single Touch Payroll Finalisation for the financial year so that your employees have the data to do their tax returns when the time comes.
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2. Deal with assets and stock
Business assets and trading stock cannot be ignored when closing. Assets may need to be sold, written off, or transferred, and GST may apply on disposal. Trading stock must be accounted for correctly in the final accounts.
You cannot simply sell everything for cash on Facebook or Gumtree and not declare the revenue. If you drive a car that is owned by the company or trust, it will need to be transferred with your relevant state authority into your personal name or sold to a third party.
This step is commonly overlooked and can trigger ATO queries if handled incorrectly.
3. Lodge final tax obligations
This is the most important step and the one most often misunderstood. You cannot simply stop lodging and assume the ATO knows your business is closed.
Depending on your situation, you may need to lodge final Business Activity Statements or Instalment Activity Statements, and a final income tax return for the financial year that you cease trading. Partnerships, companies and trusts must ensure their final returns are marked as final.
If final lodgments are not submitted, the ATO will assume the business is still operating and continue issuing obligations.
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4. Cancel registrations in the correct order
Once final lodgments are completed, you can cancel business registrations. This may include cancelling the ABN, GST, PAYG withholding, and FBT registrations.
The order matters. Cancelling too early can prevent you from lodging required final returns and cause unnecessary complications. This step should be done carefully and usually with professional guidance.
If you are on a cash basis for GST, you cannot cancel your GST registration until all invoices have been paid by your customers.
5. Close bank accounts and facilities
After all income and expenses have been processed, final taxes paid, business bank accounts can be closed. Transfer any remaining funds and close credit cards and merchant facilities. Keep copies of bank statements for your records, as they may still be required later.
6. Notify relevant parties
Let insurers (including workers’ compensation), landlords, lenders, suppliers, clients, and any licensing bodies know the business is closing. Clear communication reduces disputes and confusion and helps bring everything to a clean conclusion.
7. Companies: Notify ASIC
As long as the company is solvent (able to pay all of its debts as and when they become due), has no outstanding debts or legal proceedings, and assets are worth less than $1,000 at the time of closing, the process of deregistration of a company withthe Australian Securities and Investments Commission (ASIC) is relatively straightforward:
Complete and lodge the ASIC form 6010 – Application for voluntary deregistration of a company
Pay the ASIC fee of $50
Speak with your accountant before you close
While the steps above provide a general checklist, every business is different. Your structure, registrations, staff, assets, and tax history can affect what needs to be done when closing down.
Speaking with your accountant before cancelling registrations or lodging final returns can help identify additional obligations and avoid costly mistakes or unexpected tax bills later.
Closing a business is a process, not an event. Done properly, it gives you certainty and a clean slate for whatever comes next.
