Feature: putting a company into mothballs

Are you a business manager and want to put your business on hold? It is possible to put it on standby!

But what does it mean to put a company on hold, and what's the point?

Putting a company on hold is linked to the desire to pause its activities for a limited time without dissolving it. Such a procedure is useful for various reasons:

• A newly created company can immediately be put on hold to provide a company 'ready to go' that the entrepreneur only has to resell. Buying such a company allows you to avoid the registration formalities. In this case, the founder puts the company on hold as soon as it's created, for as long as it takes to find a buyer.
• Putting a company on hold can also limit the deterioration of the company's financial health and buy time to find a solution.
• Finally, putting your company on hold can make it easier to change its activity while avoiding deregistration or the need for a new declaration.

Nevertheless, putting a company on hold involves steps that must be followed to the letter.

To make things easier for you, today we're focusing on putting a company on hold!

Steps to take when putting a company on hold

First off, let's dive into the steps you'll need to take to put your business on hold.

In this respect, there are two steps to follow:

• First and foremost, you need to get the decision of the company's legal representative to put a company on hold. Organizing a general meeting is optional unless stated otherwise in the articles of association. However, it is necessary to confirm the decision of the legal representative collectively in order to limit their legal liability.
• Following this, you'll need to declare the temporary shutdown of the business to the relevant Business Formalities Centre (CFE) and also file the company's financial statements.

Once these two steps have been completed, the registry of the court will take care of publishing the temporary closure in the BODACC.

How a dormant company works.

The procedure for putting a company on hold is designed to put your business activity on standby for a specified period. During the dormancy period, the company must still meet a number of obligations.

Accounting obligations

Firstly, the company is subject to accounting obligations during the period of inactivity of the structure. The first accounting obligation lies in the obligation to prepare the company's financial statements, finalize them and then submit them.

Next, it is mandatory to continue to organize general meetings.

It's important to specify that accounting obligations can be reduced if the company in question has no employees.

If applicable:

• Preparing a balance sheet or income statement is not mandatory for companies with commercial activities.
• The balance sheet and income statements must be prepared in a simplified format for VSEs (Very Small Enterprises) that are legal entities.

Tax and social security obligations

Secondly, the company is also bound by tax and social obligations when it's placed on hold.

These are multiple:

• The company must continue to declare its results with the mention « none », as its turnover is zero. However, it does not have to declare VAT.
• The company must also pay the CFE for the 12 months following the dormancy operation. After this period, it is exempt.
• Finally, the company director has the option of keeping ACRE and their social security cover.

The end of the dormancy period

Lastly, it's important to describe how to bring your business out of dormancy.

To end the dormancy, the company's president must file an amendment declaration with the CFE. Such a declaration is essential if you don't want your company to be struck off by the Commercial Court.

This declaration can mention three different things:

• Reactivating the company and resuming business
• Reactivating the company and transferring it
• Reactivating the structure and dissolving the company

In conclusion, the temporary cessation of activity procedure can be very useful.

But be careful: if a company is dormant for more than 2 years, it may be automatically removed from the register.

So, you need to keep your eyes peeled!