Step by Step Guide on How to Close a Business in the Philippines
Closing a business in the Philippines is just not plain stopping – like no more selling or offering of services. You need to have proper closure with BIR and other government agencies especially if your business is registered and has been paying taxes.
Parang relationship lang yan, if-mag-break-up kayo, mag-usap kayo, wag kayong mang-ghost. Wag nyong i-ghost si BIR. If you want to know the proper procedures in closing a business, here’s a guide on How to Close a Business in the Philippines.
When you start a business, it’s also good knowledge to know how to close it. We don’t want regrets, right? Baka may mga requirements sa closure na tinapon nyo or di nyo pinahalagahan, may penalty yan if di complete. Opening a business is easier than closing. You’ll need to report to BIR plus give your books and receipts back. If you are not yet processing, you will still need to report your quarterly income tax even though it’s zero. Better do this ASAP.
P.S. This article is aimed for small businesses. In case you are a corporation or partnership, it’s better to ask for assistance from your accountant.
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Requirements to Close a Business in the Philippines
For all
- Valid ID of the business owner
- Letter of Request for Closure of Business – see sample below – you can have your copy and signed or noted by the Barangay, Municipal, DTI, BIR
Dear Sir/Madam,
I am (your name), proprietor of (business name) that is located in (address) since (start of business).
I would like to request the termination of my business. I am closing it due to the following reasons:
- I have losses that are hard to recover due to the pandemic
- I can’t hire employees as it would give me the additional expense and I can’t sustain the business myself
- Extra funds for my business has been used for personal necessities
The last day of my business has been on (day). I hope your good office grants my request.
Sincerely,
Name of Owner
CC:
- Brgy. Captain
- Mayor’s Officer
- DTI
- BIR
For Mayor’s Office
- Barangay Clearance that states that the business located in said Barangay has already been closed
- Business Permit – the one that was given to you by the Mayor’s office when you started the business
For DTI
- Affidavit of Cancellation of Registered Business Name – same with the letter of request; however, this is notarized by a lawyer
- Original copy of B.N. certificate
For BIR
- Certification of Closure from the Mayor’s Office – you can get this after submitting the letter of request as well as the Barangay Clearance. Make sure your Request letter has been signed his portion on your letter
- DTI Certificate of Cancellation – a letter of request is needed, you can do this online through the DTI BNRS Website
- Form 1905
- List of ending inventory of goods, supplies, including capital goods
- Inventory of unused Sales Invoices or Official Receipts
- Unused Receipts and Invoices
- Certificate of Registration (Form 2303) – must be Original
- “Ask for Receipt Notice”
- Books of Accounts – your journals and ledgers
- Income Tax Returns for the last 3 years
Steps to Close your Business in the Philippines
STEP 1: After stopping your operations, prepare your letter of request and go to the Barangay to ask for a Barangay Clearance.
STEP 2: Proceed to the Municipal Hall to ask for a Certification of Closure. You can present your documents.
STEP 3: Go to the DTI BRNS website and also proceed to the cancellation of your business name. You may also go to the DTI Office and present your documents and ask a DTI Certificate of Cancellation.
STEP 4: Before going to the BIR, fill-up the form 1905. Prepare also the documents asked. You can put your documents in a box so that it’s easier for you to bring to the RDO.
STEP 5: Off you go to the Regional District Office where you registered. Ask the BIR officer on where you will submit your documents – sometimes it at the TIN officer as they will cancel your business or the Examiner to check your documents.
If you have missing documents, you’ll have a penalty of PHP 1,000; if you skipped filing returns, it might be more. They might communicate to you in case you need to submit something. Settle your dues. After everything has been cleared; no more open cases, etc., and then you will be contacted by the in-charge.
STEP 6: Go back to the RDO and get your Certificate of No Liability. This means you have no more liability or utang to the BIR.
Additional note: In case you have employees and pay contributions for them, you will also need to report to SSS, PhilHealth and HDMF.
And that’s how to close a business in the Philippines. If you are a corporation or partnership, then you’ll have to pass through SEC rather than DTI. It seems simple, but it could take a month to process everything – much longer than opening a business. Its sad saying goodbye, but I hope you find a better venture or a more profitable business. Good luck!
About the Writer
Hey, I’m Lyza! I once was a person who just imagined going to places “one day” but decided to pursue my dreams. My first travel abroad was in Japan, solo, last 2018, and fell in love with the journey since. I’m aiming to visit 10 countries before turning 30 and 2 new places in the Philippines every year. Besides traveling, I love organizing trips, photography, reading, and making new friends. Follow my adventures through my Instagram.
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Pag po ba di fully paid un liabilities di maicloclose lahat ng cases para makapagregister ng bago? May payment plan po ba sila for liabilities. Need ko kasi mag file ng bago since i started working as JO sa government. Meron nakaregister sa TIN ko na business na hindi properly naclose and nagaccumulate ng penalty.
may Open Case pa po yan – you’ll need to wait for their computation and pay.
Hello maam , I need advice po
Nasa France po ako 4 years, and may business ako sa pinas, but pina close ko po na sia sa municipal na po namin, but the problem po is sa Bir, do I need to make an appearance po ba sa Bir for closing it?ano ano po ung mga requirements?
and right now po meron na pOng new owner ng business ko registered na po sia na municipal but sa Bir hindi pa kasi dko pa sia naipapa close, kunbaga magagawa kaya sia through online to close it? Thank you po
Di po yan makaya ma-close online lang, need mo mag-SPA ng tao kasi pa-balik2 sila nyan sa BIR
Hi miss lyza, tanong ko lng po kng need so ang 1604e for closing a eatery business? Un po’ ung sinabi ng taga BIR samin
nagwithhold po kayo?
hello po, ask lang po sana ako. kumuha po ako ng BIR 2303 last Jan 2021, I am a free lancer Architect po, then plan ko po ipaclose yung registered business kase currently working na sa government. what are the requirements po na kailangan para maclose cya? hindi po ako nagbayad ng mga dues since the registration until now. help me please if magkano ang babayarin ko po? thank you!
Hi Mam lyza question po due po kse sa pandemic napagdecide ko po isalba ung business ko binenta ko po ung business ko sa friend ko dahil franchise po cia at hindi pa tapos ung contract nag transfer of ownership po kmi sa franchisor ko. Ngaun po paano po ba ang process ng pagclose ng business name ko/ company name kailangan po ba iapply na cancellation of business ?kase po gusto ni new owner palitan lahat pati business name at ung tin na gagamitin ni new owner is Tin nya na? medyo naguguluhan po kase ko Thanks po
Hi Mis Lyza,
Ng open ako ng catering business way back 2015 and hindi naman nakapag operate even once kasi ng ofw na ako right after makuha permits sa BIR, And now mag oopen aq ng new biz kaso jeed daw i close ung previous which now q lang nalaman, mag kanonkaya penalty noon sa munsipyo at sa bir. No operation sya ever since..
Thanks for the answer..
may bayad po ba magpa closure ng bir dahil sa pandemic updated nman po ang bayad nmin sa bir.magkano bayad sa closure salamat po
Hello po, ask ko lang sana maam what if po nakapag file na ng closure then okay na ibang procedures like nasurrender na ung mga unused na receipts pero may bbyran po kasi na 5k. Eh last year pa po yon till now hindi pa po nsesettle pero di na po totally nag ooperate, every month pa rin po bang may penalty?
hi Lyza,
ask ko lang po baka may format kayo ng List of ending inventory of goods, supplies, including capital goods.
thank you
Check nyo po sa google – bir inventory list may annex a, etc. yan
Hi maam
Lyxa as a pwner partner pp ng business kasi matagal na dipo nagooperta ung business niya almost 2 yer n po gawa ng pandemic po wala budget na po kasi pero dipa na paclose ano po pd gawin salmat po sa advice
Doon po kayo sa bir mag-close po, even if zero income dapat report pa din kayo sa VFS
Hi I’m Rochie I do have friend ba nag stop yung business nya sole proprietorship po sya dahil pandemic walang gusting bumili ng bahay.panu po ggwin nya sa BIR?
pwede naman sya mag zero sales lng po if i-reresume pa nya services nya
Hi m’Lyza panu po ba ang procedure ng pagpapa-closed ng business permit at BIR permit ng house rental.. thanks in advance.
dalhin mo requirements sa post sa BIR po
hello ma’am Lyza! original copy po ba ang kailangan na ibibigay sa munisipyo kapag ipaclose na yung business? Nawala po yung original copy ko po pero may xerox copy naman po ako. Salamat po in advance!
pwede naman po xerox …
Hi ma’am Lyza. Same procedure din po ba if di natuloy yung business? Kasi po kumuha ako ng business permit then, di naman natuloy yung business ko. Thank you for your answer.
Pwede naman po di i close if may business permit, wala na po kasing bayaran sa munispyo yan – tapos na
but iba din yung registration sa BIR.
Hi ma’am Lyza
tanong ko lang po
what if may mga kailangan ako bayaran na kulang sa BIR tapos di ko pa mabayaran kasi nga wala pa
akong sapat na pera. e coconsider close pa rin po ba yung business? wala na kasi nag operate since last yr March 🙁
ma-cocompute nila nya mam yung kailangan mong bayarin pag open case na po.
Hi po maam lyza paloma.maam ask lang q maam naami bisnis nya gipa close namo nya last renew namo last 2020 tapos nagclose mi kay tungud sa pandemic 10months mi nagclose tapos naka operate mi og balik dec.23 2020 nya ang nag handle namo na company sa corp.bisnis namo nya ang nahatag nila sa amoa sa renewal mayors permit lng wla nay lain papers.nya karon nag file mi for closure naay bookeeper nga naglakaw sa closure wla niya gihiman karon q ang nagtiwas sa iyahang gibuhat maam karon nahibal an naku nga naakoy penalty na 70kplus naakoy documents na gipangita wla gihapon dawata sa mandaue cityhall kay kuwang og 2303 nya unsaon mana naku maam mag continue bana akung penalty maam sa bisnis corp.namo nya ang bookeeper nakakuha nasad og new permit para sa single name namo sa bisnis.pls advice me maam kung unsay angay nakung buhaton aning closure namo nga nagka penalty manko og dako.salamat maam hope ma advice san q nimo maam kay need najud ma close naku ang closure.
sa amoa mam para dili ma penaltyhan kay bisan sira magreport lang gihapon sa BIR every quarter.
Usually, if mag close ug business mag-open case na sila mam. Check lang mam ngano naka-penalty mo, basin na bayran na na ninyo pero ang bir baya may amnesia.
Hi mam liza, ask ko lang usually how much yung payment sa cert of closure ng bir? Thank you
depende po if may makikita sila na walang file or binayaran.
hi Miss Liza thank you so much sa info, big help po
Mam/sir good day
Tanong ko Lang po nag close po ako ng business and then lahat po Ng COR SAKA receipt ay naibigay ko na . Tapos Ang tanong ko Lang po is makukulong po ba ako or mahihirapan kumuha ng NBI kapag Hindi na close Yung business
By the way po Yung business line ko po is sales agent po and 2 months Lang ako tapos wala din po among benta
Di naman po unless kakasohan ka ng BIR, pero yung hinahabol usually nila mga big companies.
Hi,
Paano ko icclose yung grab business ko? i only have DTI and BIR permit.
You can ask a certification from grab.
Na wawaive po ba ang penalties or nalelessen if hndi mo properly na close ang isang business at inabot na ng almost 7years?
Depende po sa assessor ny po. Pero, baka marami kang open cases nyan.
Hello po good morning nakita kopo yung post mo sa vlog mo sa google about po sa close ng business permit ask lng po yung smin po ang kaso po kasi hindi po updated yung resibo ng bir hanggang sep 2019 at nagsarado po sya since nag pandemic magkano po kayang penalty nun salamat po and godbless keep safe po
You need to file an open case po sa BIR to know how much you’ll pay, but expect at least 5/10K
The business closure herein is under DTI and or SEC, how about under CDA?
please contact CDA
Hello pano naman kung 4 years na diko napaclose ung business ko pero 1 year ko lang napa operate pano kau po un!..
Hi thanks for this informations Ms Lyza . BAka pede ako makahingi ng tulong baka pede mo ako mabigyan ng kung ano pede gawin , my business was not properly closed , franchised generika and was taken over by company ( kumbaga naging company owned na ) this was last july 2018 . So starting july 20 18 hindi na ako may ari . Akala ko all the while hindi pala na closed na tama under my name . To make the story short this year i was informed by BIR na may due ako sa kanila ,and i need to do the proper procedure ng pag close kaso wala na un COR UNUSED RECEIPTS AT WALA NA AKO MGA LIST OF INVESTORY PANO PO KAYA GAGAWIN KO ? Hingi po sana ako advice , thank you
if di mo makita yung mga files mo, there’s a possibility of paying penalty. Hanapin mo muna sila first kasi malaki yung babayarin mo if ever wala kang mga proof.
Gud eve po mam Liza may nabili po aq na bakery and then hindi namn po nkapangalan sakin balak ko po Sana ipapalit sa name ko pano po ba ang step at San aq maguumpisa
read this po:
Start Up Business in the Philippines – How to Register your Business in DTI
Start Up Business in the Philippines – How to Register your Business in DTI
What if the reason for closure is transfer from sole proprietorship to corporation
Hi! What if I no longer have access to these documents? Am overseas but I need to do it.
You can appoint somebody to do it for you through a How To Get a Special Power of Attorney in the Philippines and Extra Tips for OFWs Abroad
Hi mam pwde po ako mag tanong po?
Hi Lyza! Thank you for sharing this info. It’s really helpful! God bless and more power!
Thanks 🙂 the tips is very helpful
wow. bakit ngayon ko lng nalaman ito?
salamat po at may idea na po ako kung paanu magclosed ng business kasi talagang hirap ngayon pandemic.