Closing a business or settling income tax debts
Often people think they have closed their business, only to find that the business did not close properly at all. At best, you will find out from a letter demanding you pay a fine for non-reporting, and at worst, you will find out later from an unexpected foreclosure at the bank.
A representative tax advisor can check the status of the case and open claims against the IRS system for income tax and national insurance.
What can be done about fines?
We have accumulated extensive experience in dealing with business closures, changing the type of income tax file and reducing or eliminating fines.
First, check that all income tax claims are declared. After that, all personal income tax reporting requirements must be met as soon as possible, and, finally, in a smart way, you can ask to reduce fines, and divide the debt into payments.
In all of these areas of practice, an experienced tax advisor can be of great benefit to you.
Below is a link to a detailed and concise explanation of the steps required to close a business on the website of the Ministry of Economy and Industry.
Conclusions?
We recommend doing a proactive check that your business is indeed closed properly before the first source – income tax. Also, be sure to meet all income tax requirements.
How do you check?
You can easily check the current file type you have on the income tax website by creating an income tax certificate (immediate and free). When an independent file is closed, it should appear as a closed independent file of type 10 or 91 (the employee is not required to submit a file). Types such as 96 and 98 are designed to close with balances (cash debts or underreporting). 40, 42, 52 an active independent file, and 30,97, 93 an employee who is required to make a deliberate annual submission. Below is a link to check the type of case currently on the income tax website.
Why is this happening?
In our experience, the business is not closed for income tax, as it should be, for several reasons – firstly, because the accountant who handles the report only closes the business for VAT and does not complete the process with the tax authority.
Secondly, because in addition to the request to close the case by filling out Form 2250, it is required to track all the stages of closing that actually went through properly, and all irrelevant requirements were canceled (sometimes the process can also take several years, because the client must submit a report through one and a half years after closing the business).
So how to close?
Below is a link to the website of the Ministry of Economy, where there is a clear and simple explanation of all stages of closing a business.
It’s important to us that you know! If you do not inform the appraiser that the business is closed, you will still be held accountable for income tax returns and continue to accumulate debt.
