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Company liquidation
Firm´s closing performance: Briefly and clearly on company liquidation and unavoidable tax contexts
It is said that everything comes to its end once. And because also the entrepreneurship need not be an exemption in this respect it sometimes happens that it comes to a sad moment when all the hopes and dreams at the beginning do not come true and they are replaced by an unavoidable process of step by step liquidation of the company. Although it is extremely unpleasant its primary aim is fully clear. All assets and liabilities must be settled completely as well as all the property relations, which subsequently reach the phase of the actual termination of this company and its definitive removal from the business register. At such a joyless moment when the company with limited liabilities starts its liquidation it is simultaneously closing its present activities and it should invest all its time and energy into the settlement of its assets and liabilities, disposal of the net liquidation balance and after that also into the smooth termination process.
If you are however connected with this sad event we are bringing you below a brief and clear summary of all the basic acts of the whole process together with their simple description. Those are the very points which you will almost surely have to face in the frame of the process so that it can run as easily and as quickly as possible, in spite of certain specific characters of the individual cases. The reason why you should seek an advice just from us is among others also the fact that we are tax advisors, for whom there is no problem to arrange for financial statements or for tax returns.
The company as a matter of the past
The company liquidation starts in a standard way with the respective authority´s decision about its cancellation and the company´s going into the liquidation. It happens provided that all the property does not pass to a successor in title. At the moment of its cancellation, on the same day, the company goes into the liquidation while, because of administrative reasons, the non-written rule of such a procedure is usually its timing towards the first day of a month.
A scar on the heart does not soften the bureaucracy up
There follows an unavoidable duty of the company of delivering an ordinary tax declaration in the thirty day´s term from its going into liquidation. There is probably no need to add that it is that part of the taxation period which had elapsed before the day the company went into liquidation.
Who is going to be “the executioner” which means a liquidator´s nomination
Simultaneously with the company liquidation and its going into the liquidation the Czech law defines the duty of the respective authority to call up a liquidator to the company. He is in case of the company with limited liability (in Czech: s.r.o.) elected by members of the general meeting when it is stipulated in the memorandum of association while in the opposite case this is the duty of the statutory authority of the company in question.
The liquidator´s role is basically simple. He may wait for company´s going into liquidation in order to be then able to make a suggestion to register the case in the business register. Before the whole process of the liquidation is finished the company´s representatives use an amendment “in liquidation” to their trade mark.
Notification to the Trade Licence Office of going into liquidation
Notification of going into liquidation and its publishing in the Commercial Bulletin
With respect to the wording of the law and the respective duty of the liquidator obliging him to draw up an opening balance sheet and the company´s property inventory to the date of the company´s going into liquidation which will then enable him to find at least a part of the company´s creditors this liquidator must at the same time respect the credibility of these creditors and deal with them as if they were entitled, while in the case of the other creditors it is directly offered to abide the duty of the notification of going into liquidation in the above mentioned Commercial Bulletin.
Drawing up of an opening balance sheet and of a list of assets
Drawing up of a financial statement
Duty to present an application for insolvency
Settlement of property relations, of debts and of receivables of the company
While the liquidation of the company is running peacefully, the elected liquidator has the right to monetize the liquidation mass and simultaneously to settle all property relations regarding the past of the closing company.
Drawing up of a final report on the process of liquidation, of the financial statement and on the proposal for using the liquidation balance
Duty to present a tax statement for the drawing up of a proposal of using the liquidation balance
However, that is not the end of the whole procedure as the essential drawing up of a proposal for using the liquidation balance is followed by another duty which is the necessary presentation of the so called proper tax declaration. Within 15 days since the day of the drawing up of the proposal for using the liquidation balance including also that part of the taxation period which had passed before the day of the drawing up of this proposal.
Archiving company documents in the state archive
The Application for removal from the business register
