How to Shut Down a Business: Striking Off or Liquidation?

Closing a business is a significant step, and the method you choose can affect your finances, timeline, and peace of mind. In Singapore, the two primary options are striking off and liquidation. These paths differ in cost, complexity, and purpose, and choosing the wrong one can result in delays or legal issues.

This guide explains both options to help you make an informed decision.

Striking Off: The Basics

Striking off is a quick and affordable way to dissolve a company. It involves asking ACRA (Singapore’s business regulator) to remove your company from its register.

It’s ideal for:

• Companies that have ceased operations
• Businesses with no debts or liabilities
• Firms with all tax obligations met
• Companies holding no assets

The Striking Off Process

1. File an application with ACRA
2. ACRA reviews it, potentially requesting additional details
3. If everything checks out, the company is struck off in about 4 months

Striking off is efficient, but it’s not an option if the company has outstanding debts or disputes. In such cases, liquidation is required.

Liquidation: The Basics

Liquidation is a formal process to close a company’s operations. It involves liquidating assets, settling debts, and distributing any remaining funds to shareholders.

There are two main types:

• Voluntary liquidation: The company opts to close, often due to financial struggles or redundancy
• Compulsory liquidation: A court mandates closure, usually over unpaid debts

Liquidation is the right choice when:

• The company has debts or assets to resolve
• There are disputes among stakeholders
• A structured process is needed to meet legal standards

A professional liquidator manages the process, and many firms offering corporate secretarial services assist with the paperwork and compliance.

Striking Off vs. Liquidation: A Comparison

Common Pitfalls to Avoid

• Striking Off with Unpaid Debts
  ACRA won’t allow a strike-off if debts remain. Pay them off or pursue liquidation.

• Neglecting Paperwork
  Both processes require up-to-date records, including tax filings and financial statements. Missing documents can cause delays.

• Skipping Professional Help
  Closing a company involves legal nuances. Secretarial services in Singapore can streamline the process and prevent mistakes.

When to Strike Off

Choose striking off if:

• The business is dormant with no activity
• All debts and taxes are settled
• You want a fast, low-cost exit
• There’s no plan to revive the company

It’s a hassle-free way to close a clean business.

When to Liquidate

Opt for liquidation if:

• The company has debts or assets to manage
• There are legal or stakeholder issues
• A formal process is needed for credibility

It’s more involved but ensures everything is handled properly.

Act Sooner Than Later

Procrastinating can increase costs and compliance burdens. Even dormant companies must file annual returns and pay fees. Closing promptly saves time and effort.

If you’re unsure, reach out to experts in corporate secretarial services Singapore. They can evaluate your case and recommend the best path.

Closing with Confidence

Striking off and liquidation are effective ways to end a business. By choosing the right method, following the steps, and getting professional support, you can close your company cleanly and move on without stress.