Is your company in a bad way? Even though this is a difficult and often frustrating stage in the life of an entrepreneur, it's a risk. Especially since closing a business is not something you can improvise!
To give you an idea of how many companies are subject to a closure procedure every year, here are some figures published by the Banque de France.
According to the latter, the average number of companies that go bankrupt each year in France is around 61,000.
The structures most likely to fall victim to such a failure are generally small businesses, with 53,000 for micro-businesses and 4,000 for SMEs.
In view of the risk of failure when launching a business, it's best to be well informed about the procedures to follow in the event of bankruptcy.
Focus on the process of closing a business!
What's the difference between "dissolution" and "liquidation" of a company? First and foremost, these are two key stages in the closure of a company, but they need to be distinguished, particularly in terms of chronology.
So, while dissolution is the first stage in closing down a company, liquidation is the final stage.
Dissolution refers to a joint decision by all associates to put an end to the company's activity, while liquidation corresponds to the implementation of such a decision from an operational point of view (what to do with the company's assets...).
It is important to specify that an amicable liquidation is truly impossible without prior dissolution, for two reasons:
- It is during the dissolution phase that the liquidator is determined.
- Dissolution opens the process of closing the company.
Because these two steps are so closely interwoven, they must be followed to the letter, otherwise the procedure could be flawed.
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There are four steps involved in dissolving a company:
- First and foremost, shareholders are required to meet at a General Meeting to vote on whether or not to dissolve a company. It is at this meeting that a liquidator is appointed.
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It is then up to the liquidator to act. He or she mustregister the minutes of the general meeting at which the dissolution was decided, with the tax authorities. The company must then pay a fixed fee of 375 euros if the company's capital is less than 225,000 euros, or 500 euros if it is greater.
- A deed appointing the liquidator must also be published in a Journal d'Annonces Légales or JAL corresponding to the département where the company's head office is located.
- Finally, a complete file must be submitted to the CFE. This must include a completed, dated and signed M2 document, and a copy of the notice of appointment published in a JAL. You will also be required to pay 200 euros in court fees.
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Concerning the liquidation of a company:
- The liquidator's role is to draw up an inventory of the company's assets and liabilities, draw up a debt recovery plan, and terminate the partners' rights to the company's assets.
- A new general meeting is then held to approve the liquidation accounts and close the closure process. Once again, minutes are drawn up, which must be registered with the tax authorities.
- Finally, the closure must be published in a JAL, and the company is deregistered from the CFE following receipt of a file.
It is absolutely essential to remain in good standing with the tax authorities throughout this process.
This is particularly true of the immediate taxation of profits made by the company as soon as the cessation of activity is formalized.
The tax authorities also need to be aware of any potential capital gains arising from the sale of the company's assets.
Finally, registration fees must also be paid to the tax authorities, as mentioned above.
In conclusion, while the decision to close your business is a difficult one in itself, it's also a difficult one from an administrative point of view.
This is why it's a good idea to enlist the help of professionals to ensure that the closing procedure goes as smoothly as possible.
Written by our expert Quentin Moyon
May 11, 2018
