Winding down your business? Make sure to close your BIR registration right away to avoid tax problems down the road.
Deciding to close your business can be difficult, but an important step is properly closing your Bureau of Internal Revenue (BIR) registration. Here’s why you should make it a priority to shut down your BIR registration as soon as you close shop.
Avoid Unnecessary Tax Compliance Obligations
Once your business is closed, you want to avoid any lingering tax compliance obligations. This includes requirements to file returns, pay registration fees, and more. By quickly closing your BIR registration, you ensure your compliance duties end when your business ends.
Prevent Potential Penalties for Non-Compliance
If you keep your business’s BIR registration open after shutting down operations, you risk penalties for not complying with requirements. The BIR may penalize you for failure to pay registration fees, file returns, withhold taxes properly, and other violations. Close your registration right away to avoid these fines.
Receive Final Tax Assessment and Clear Tax Issues
The BIR will provide a final tax assessment when you close your registration. This provides closure on any outstanding tax obligations for your business. Getting this final assessment allows you to address any tax issues early and avoid problems down the road.
Protect Yourself from Possible Abuse of BIR Registration
An open BIR registration could potentially be abused for illicit financial activities, even if your business is closed. Shutting it down protects you from any legal accusations or problems caused by identity theft of the business registration.
Relieve Yourself of Recordkeeping Duties
You must continue meticulously maintaining tax records if your BIR registration stays open. By closing it soon after shutting down, you’re relieved of having to keep and manage years of old records and documents.
Closing your BIR registration is easy once you submit the proper closure form and requirements. For peace of mind and to avoid headaches, do it as soon as you shut down your Philippine business. It provides closure to your tax obligations.