What are the procedures for closing a business?
Compared to a limited company, the closing of a self-employed business (freelancer or autonomo) is relatively simple. In addition to the things you have to do in practice (e.g. return the store to the landlord), legally you will have to do two things:
– Cancellation of the registration in the tax office
The Spanish General Tax Code requires that anyone who carries out commercial activities in Spain must be registered for tax purposes in order for them to collect taxes. Therefore when closing a business you must also notify the tax office that you are closing it. If you do not declare your closure in time, the tax office will think that you are still in business and you will have to pay quarterly taxes then.
To cancel your registration with the tax office, you need to use the official tax office form Modelo 036. The official form can be filled out online ( click here to go to the tax office website ) and submitted using an electronic certificate. Some tax offices also support in-person visits to their offices to fill out the form and submit it.
Note: There is a streamlined version of Modelo 036, Modelo 037, which can be used if the filer is self-employed and the amount of information to be filed is not too large. The Modelo 037 can also be used if you are a self-employed person and the information you need to report is very simple, just a notification of the closure of the business.
In addition, you should note that if you have multiple premises and just shut down one, then you also need to declare that you changed your business address to open for business.
Note: In the current quarter of deregistration, you also need to continue to file tax returns. For example, if I closed my business in April, I will have to continue to do the quarterly tax for the second quarter in July. Likewise, at the end of the year, you need to do the annual summary.
-Cancellation of the registration in the Social Security office
The Social Security Law stipulates that all workers who work in Spain are required to pay social security contributions to the state. The owner of the store has to register as “autónomo” with the Seguridad social of the Ministry of Labor in order to pay the social security contributions every month. If you stop working, you should also cancel your registration with the Ministry of Labor. If you forget to cancel, the government will continue to charge you for the insurance.
Cancellation can be done online (with an electronic certificate) or in person at the Social Security office. Click here to go to the official website of the Social Security Administration.
What procedures do I need to go through to close a company?
The cancellation of a company’s registration is the same as the cancellation of a self-employed person’s registration at the tax office and the Social Security office.
After the company is deregistered by each department, it will cease to operate. However, it is important to note that the company itself still exists as a legal entity.
If you want to cancel the company itself, you should first dissolve it and then register it in the Commercial Register. The specific steps are as follows:
- The company holds a general meeting of shareholders to adopt the dissolution of the company.
- After the company opens the dissolution procedure, the company is to be wound up. It means selling all the company’s property as well as paying back all the money third parties.
- If the company has excess money, it should be distributed to the shareholders proportionally. The shareholders then resolve to permanently cancel the company.
- Go to a notary public’s office to get a notarization of the cancellation of the company.
- Take the notary deed to the commercial registry for registration.
