by Lake from Bookkeeping Essentials
(Northern BC)
Research Results On Corporate Windups
Winding up a corporation through corporate dissolution creates a deemed dividend for its shareholders. This also applies if the company was struck from the corporate registry. If done properly, you can eliminate or at least defer tax.
This is one area where you should not "do-it-yourself". Speak with your tax accountant!
In some provinces lawyers are the only ones who can handle certain types of transactions like Articles of Dissolution ... with rules prohibiting other professionals to act as lawyer.
So bookkeepers, tread carefully here. Find out the laws in your province.
A mistake can have negative consequences for yourself and for your client. Have your clients hire a lawyer experienced in corporate windups ... or a CA firm that has tax specialists who specialize in tax windups with access to a legal department.
I have come across two articles on dissolution of a corporation I thought to pass along.
FIRST ARTICLE -- Dissolution of a Corporation-How do you "Close" your Corporation?
A white paper titled Dissolution of a Corporation
How do you "Close" your Corporation? explains the steps that must be done.
This paper talks more about the legal aspects and not the accounting aspects of winding up a corporation.
You can locate the paper at www.nebs.ca/pdf/legal/Dissolution_Corporation.pdf
SECOND ARTICLE -- Winding Up A Corporation
The second article I found is by JA Smith & Associates INC, CGA written in December 2009. It explains the tax consequences of a windup and some of your options.
You can locate the article at www.jasmith.com/winding-up-a-corporation .
by Alex
(Vancouver)
Hopefully visitors to the site who have experience with dissolving a corporation will be able to respond to this post.
Click here to read or post comments
by Robert
(Toronto, ON Canada)
How To Remove Funds From a Corporation
I own a small corporation, with a partner, as a side venture. The business has pretty much run its course and we will most likely wind it down shortly.
My question pertains to roughly $20,000 still sitting in the account. My plan was to give ourselves $10,000 each and then turn around and purchase RRSP's with the funds. How would all of this be recorded - both on the corporation side and the personal side?
I know on the personal side its income but under what "category" for instance ...
Any help would be greatly appreciated!
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