What is Liquidation? How to Close a Company? How to Close a Company?
What is Liquidation?
Liquidation is the name generally given to the closing process of companies. Commercial enterprises may terminate their existence from time to time for different reasons. Liquidation is preferred for many reasons such as stabilization of unprofitability, partner disagreements, inability to adapt to the sector and the market, and inability to establish a supply and demand balance. When a company goes into liquidation, as a rule, it retains its legal personality until the end of liquidation. Only the phrase ‘in liquidation’ is added to the trade name of the company.
What are the Stages of Liquidation?
The most necessary reason for the initiation of the liquidation process within the company is, of course, the existence of a reason that may terminate the existence of the company. In such cases, the tax office or trade registry offices of the province where the company is located are applied to. If the company to be liquidated is a sole proprietorship, the owner can initiate the liquidation process alone. In the case of joint stock and limited liability companies, each of the shareholders must approve the liquidation.
Even if all shareholders within the joint stock and limited liability company approve the liquidation process, the company continues to exist until 6 months after this process starts. However, during the 6-month process, the company’s powers will be reduced to a minimum level and all transactions to be carried out will be evaluated by authorized officers. After the completion of the applications, the liquidation certificates or dissolution certificates issued by the institutions indicate that the liquidation process has officially started. The name of the company is then published in the Trade Registry Gazette and the company is completely liquidated. After 6 months, the company is closed without the need for any further steps.
How to Close a Company?
- The first step is to fill out a workplace closure form. This file is available on the Interactive Tax Office page.
- If you have any documents such as half or blank invoice stubs, expense receipts, delivery notes, tax certificates, etc., you must take them with you. These documents are considered valid only if they are delivered in the presence of the liquidator. In case the liquidator cannot come, the transactions can only be carried out with a power of attorney.
- If you have any debt records from previous periods to the tax office, this debt must be paid before the closure process is carried out.
- Invoices must be issued within the 6-month liquidation period for goods and fixtures remaining in stock.
- After the liquidation decision is registered in the Trade Registry, an announcement must be published in the Trade Registry Gazette for the creditors. 3 announcements should be published with 7 days intervals. Then, the book should be certified for the liquidation process with this newspaper.
- Corporate Tax should be regulated during the liquidation process. This declaration should be submitted at the end of the 4th month from the date of registration.
- At the end of the liquidation, the Corporate Tax return must be submitted within 30 days after the publication date in the Trade Registry Gazette.
- After the complete closure of the company, the taxpayers are obliged to keep the books for 5 years in case of any examination and for a period of 10 years for the relevant SSI transactions.
Documents Required for Company Closure
The documents required for the liquidation process vary depending on whether the company is a sole proprietorship or a joint stock or limited liability company. For sole proprietorships, it is sufficient to apply through the interactive tax office within 10 days.
Documents Required for Liquidation of Sole Proprietorship
- Petition to quit the job, which must be filled within 10 days from the Interactive Tax Office page
- Unused invoice stubs
- Cash register plate and license information (Notified by the service. Only the last Z report and the report must be submitted to the tax office).
Documents Required for Liquidation of Joint Stock and Limited Liability Companies
- cPetition to quit the job (It can be delivered in person or sent via the Interactive Tax Office)
- Unused invoice stubs (The liquidator must be present at the time of delivery. If not, the transaction can be carried out with a power of attorney).
When is the Liquidation Declaration Submitted?
After the liquidation process has started, the company continues to exist for 6 months. At the end of 6 months, after the company is completely closed, the liquidation declaration must be submitted within thirty days at the latest from the date of the transactions. The liquidation declaration is submitted to the tax office to which the company is affiliated. At the end of the liquidation document prepared, the Corporate Tax Declaration is submitted through the e-declaration system.
If the process has exceeded 6 months, the transactions are carried out by the liquidator. The deadline for submitting the document to the tax office is between the 1st and 25th of the fourth month after the month in which the liquidation period is closed. Then, a document called the liquidation review petition is prepared and submitted to the relevant tax office. Tax inspection procedures start within three months including this date. At the end of the process, the registry of the companies is completely deleted and their legal personality disappears.
For more information, please visit our Company Incorporation Consultancy service page.
