Closing a business in Quebec is not simply a matter of ceasing sales. As long as its registrations remain active or a company is not dissolved, certain obligations continue to apply.

The closure must be planned in the correct order: assess sales opportunities, terminate operations, settle with creditors, file final returns, and end the legal existence of the business. Here are the steps for a solvent business. In case of insolvency, consult an authorized trustee before transferring assets.

Concise answer: to close a business in Quebec, you must first check if a sale is possible, choose a cessation date, settle with employees and creditors, dispose of assets, close tax accounts, dissolve the company where applicable, and file final returns. The order is important: do not distribute assets or close the bank account too early.

Before closing, check if the business can be sold

A business that is unprofitable or has become too demanding is not necessarily worthless. It may still possess:

• a loyal customer base;

• recurring contracts;

• a recognized trade name or website;

• inventory, equipment, or permits.

A competitor could acquire some of these elements without buying the entire company.

Concrete example

The owner of a maintenance company wants to retire. A competitor, however, might be interested in its contracts, equipment, and certain employees. Before dissolution, they should compare three options: selling shares, selling certain assets, or closing completely.

To compare your options, consult Should I close or sell my business?

Step 1: Identify the legal form of the business

The procedure varies according to the operating structure.

Sole proprietorship

There is no company to dissolve. The owner must close their tax and payroll accounts, cancel their registration, and declare the last results in their personal tax return.

Joint-stock company

An incorporated company continues to exist even if it no longer has operations. A Quebec company must be dissolved with the Registraire des entreprises; a federal company must also check its obligations with Corporations Canada.

Partnership

A general or limited partnership must follow its contract and the rules applicable to its liquidation. A final information return may be required.

Step 2: Choose the cessation date and terminate operations

Choose an official date corresponding to the last day of operation. This date will be used for final payroll, taxes, and closing government accounts.

Before ceasing operations:

1. notify employees, clients, suppliers, and insurers;

2. check lease and contract termination conditions;

3. collect accounts receivable;

4. pay or document debts;

5. export data, then cancel permits and subscriptions at the appropriate time.

Do not close the bank account immediately: payments or refunds may still arrive.

Consult How to prepare for the cessation of business activities?

Step 3: Settle obligations to employees

If the business has employees, it must comply with labor standards and handle:

• salaries and accrued vacation;

• applicable indemnities or notice periods;

• records of employment;

• deductions, T4s, Relevé 1s, and summaries;

• payroll accounts and CNESST file.

In Quebec, final deductions are generally due within seven days and Relevé 1s within 30 days. Consult How to close a business with employees?

Step 4: Sell or transfer assets correctly

Make a list of the business's cash, inventory, vehicles, equipment, computers, domain names, and other assets.

An asset transferred to a shareholder must generally be considered at its fair market value. This can result in a gain, recapture of depreciation, taxes, or a shareholder benefit.

Consult How to sell or transfer assets before closing a business?

Closing GST and QST accounts can trigger specific rules for retained assets. Analyze them before canceling registrations.

Step 5: File final returns and close accounts

The business must file any missing returns, pay balances, and notably:

• file final GST and QST returns;

• request cancellation of tax registrations;

• close source deduction accounts;

• file final income tax returns.

Consult How to close GST, QST, and source deduction accounts?

For a corporation, the last tax year ends on the date of the certificate of dissolution. Consult Which tax returns to file after dissolution?

Before final distribution, check for tax losses, refunds, dividend accounts, and shareholder advances. Some balances may lose their usefulness after dissolution.

Step 6: Liquidate and legally dissolve the company

A Quebec company can be dissolved directly once its assets and liabilities have been settled. Otherwise, a formal liquidation may be necessary.

The process may include:

• adoption of a resolution by shareholders;

• appointment of a liquidator;

• settlement with creditors;

• obtaining applicable tax certificates;

• declaration of dissolution or notices of liquidation.

Consult How to dissolve a company yourself in Quebec?

Trap to avoid: letting the Registraire strike off the company for failure to file its annual returns. This strike-off does not automatically settle debts, tax returns, or the liability of directors.

Step 7: Retain documents and confirmations

Retain returns, notices of assessment, bank statements, contracts, payroll records, and confirmations. The books of a Quebec company must be kept for at least five years after the certificate of dissolution; some tax documents, longer.

Checklist

• Check if the business or certain assets can be sold

• Confirm structure and solvency

• Choose the cessation date

• Notify employees and partners, then settle with creditors

• Dispose of assets at fair market value

• Process final payroll and tax returns

• Obtain tax certificates and dissolve the company

• File final income tax returns

• Confirm account closures and retain documents

Close or transfer: make the decision before it's too late

An orderly closure reduces tax risks. Before starting, however, determine if the business, its customer base, or its assets could interest a buyer.

Considering closing? TRNSFR can help you list your business and explore sale or transfer opportunities before dissolution. Your business could still represent an opportunity for a buyer.

Government sources

• Government of Quebec, Dissolving and liquidating a joint-stock company

• Revenu Québec, Cessation of business activities

• Canada Revenue Agency, Closing program accounts

This article provides general information and does not replace accounting, tax, legal, or insolvency advice tailored to your situation.