Closure of business

Id like to ask regarding the closure of my business. i no longer want to continue my business. i had a contract with a water station for 5 years, on our contract i have to pay for a certain amount if will not finish the contract. my question is aside from the fee fromthe contract do i need to pay other penalties from he government like DTI or BIR? thanks so much!

You will pay only the penalties that incurred BEFORE and UNtil the cessation of your business and not thereafter.

The rule is if you retire a business, the TIN that was assigned to the taxpayer/ business corporation will be cancelled to apprise the BIR that the said entity is no longer operating as a business entity. that is the purpose of retiring a business. you will not be required to pay penalties if you have consistently paid all the taxes and submitted all the documents as required.

before the BIR will allow you to retire the business entity, they will be mandated to conduct a tax investigation as a matter of strict policy. the investigation by the BIR will cover the short periods like 2 or in some cases, 3 years. they will check if you have paid the correct income tax, VAT (or percentage as the case maybe) or other taxes. during the said tax investigations, you also need to submit various documentary requirements to the BIR  for them to check if you have been consistently paying the correct taxes and submit the said requirements correctly and consistently.   you may be required to submit copies of your annual income tax return for the last 2 yers, quarterly income tax returns for the last 2 years , your withholding taxes for the last 2 years, your VAt or percentage tax returns for the last two years and other BIR required documents.



If after the investigation, it was found out that you have paid the correct taxes consistently, and submitted the documents required by the BIR religiously, you may not even be required to pay even a single centavo.

however, there are times when you will be required to pay additional taxes even if you religiously filed the correct taxes for income tax, VAT and other taxes.  

additional taxes may be assessed if there are transaction deemed sale for ending inventories (if there are any) and propeties plant and equipment as of the date of retirement. This is one of the instances when you will be caught off-guard. YOu are not being penalized here but under the law, all your stocks in trade existing as of date of retirement will be considered sold, hence , subject to VAT .

Under the law, they will be considered as deemed sold or consumed even in reality they are not still sold or consumed.  hence, VAt may be assessed on that transaction deemed sale.

ask ko lang po anu procedure for closure nun canteen business namin ng byenan ko started last 2006 pa po, ang ginamit kasi na tin no. is my personal tin kaya nagkaron ng problema when I'm already working as private employee kasi nga daw po yung tin number ko ay Business name ang nakaregister? anu po ang dapat kong gawin? help

you have no choice but to cancel that business kasi ina allow mo ang tin mo na gamitin sa business ng biyenan mo.

ang problema mo is baka marami silang taxes na di binayaran. you need to pay it with the help of your biyenan.

wag mo pabayaan iyang problema na iyan. maglaki iyang tax deliquency mo if tatagalan mo pa.

kasi alam mo naman na di mo negosyo iyon, at alam mo naman na bawal iyan, you need to suffer the consequences of your own actions. the law is harsh, but that is the law. sabi nga nila, the power to tax is the power to destroy (if needed).

ang gawin mo na lang is humanap ka ng paraan para masolve i yang problema mo. pumunta ka doon s bir. at i impress mo sa biyenan mo na financial obligation niya iyon at hindi sa iyo. otherwise, isumbong mo rin sya if di sya mag cooperate sa iyo. kasi accomplice or principal din sya sa tax scheme na iyan sa negosyo niya.

gud pm..ask ko lng po sna...we have an apartment and pinaupahan po namin un as commercial so means po my business ung umuupa..the problem po is patay n po ang lola ko n nkapangalan po s kanya ang lahat..and also we found out that its almost 10yrs n po hindi pla nagbabayad for mayor's permit..ngayon gusto po sna nmin iapply for new not transfer neither renew..but the thing is sabi po sken n hindi daw po un pwede..kailangan dw po ng closure then pay all the penalties and everything etc.question po is:

Pwede po bang hindi n nmin mbyaran ung penalties at mag apply ng bagong permit with the new management..?

Tanong ko lang po yung tungkol sa kaso ko. May business po ako na internet shop but closed na since 2013 dahil wala naman po halos kinikita. Naka register po yun under my personal TIN. Ngayon po, nag work na ako sa isang private company at kelangan ko i-submit yung mga bir forms for my taxes. Sabi nung HR staff sa pinasukan kong company, ibinalik daw yung papers ko dahil kelangan i-update yung 2305 form dun sa RDO ng business ko dahil nakita nga na may business ako. Hindi ko po dineclare na closed na yun sa BIR at nag stop na din ako ng payments. Ano po ba dapat ko gawin. For sure, pag dineclare ko sa BIR na closed na yung business ko ay malaki ang babayaran ko. Pwede po ba ako mag declare ng bancruptcy para hindi naman malaki ang babayaran ko? Thanks.

lorie016 wrote:gud pm..ask ko lng po sna...we have an apartment and pinaupahan po namin un as commercial so means po my business ung umuupa..the problem po is patay n po ang lola ko n nkapangalan po s kanya ang lahat..and also we found out that its almost 10yrs n po hindi pla nagbabayad for mayor's permit..ngayon gusto po sna nmin iapply for new not transfer neither renew..but the thing is sabi po sken n hindi daw po un pwede..kailangan dw po ng closure then pay all the penalties and everything etc.question po is:

Pwede po bang hindi n nmin mbyaran ung penalties at mag apply ng bagong permit with the new management..?

Added input lang. Baka hanapan pa ng settlement ng estate tax. Kung sa decedent nakapangalan ang property, kailangan din isettle ang estate tax at may corresponding penalty din ito beyond six months after death.