Updating Business Information After A Death
The passing of a loved one, whether expected or sudden, is never easy. It brings a profound emotional burden and raises complex questions you may not have faced before, such as the future direction of their business and how it will operate without them. Everyone copes with loss differently, but Ontario Business Central is here to help guide you through the necessary steps to ensure your business is well-prepared for the changes ahead, providing support during this challenging time.
First, let's discuss what changes can be made to a business.
Making Changes to a Registered Business
A registered business in Ontario can make less changes to its registered information than a corporation can. Changes that can be made to a Business Name Registration include things like:
Business Address
Owner Address
Business Activity
However, you are restricted from changing the business name and owner name. General partnerships are able to change the partners listed, so long as at least 2 individuals remain at all times, including one original partner. Changes to a Business Name Registration (Sole Proprietorship, General Partnership, Trade Name) are done through a Registered Business Amendment.
Making Changes to an Incorporation
Incorporated businesses in Ontario and Federally have the flexibility to update nearly all aspects of their corporate information. Changes that can be made include:
Corporate Name
Share Structure
Minimum/Maximum Number of Directors
Registered Head Office Address
Addition or Removal of Directors
Change of Director’s Address
These updates are executed through Articles of Amendment or a Notice of Change depending on the type of change. Additionally, you can update corporate information like signing officers, and business activities. Accessing and managing these changes online may require your company key, which ensures secure transactions. The company key maintains the integrity of your corporate records and can be used to verify updates or access historical data.
Understanding Dissolution vs. Cancellation
Before you begin dissolving a corporation, it's important to distinguish between dissolution and cancellation. These terms are often used interchangeably, but they have distinct meanings in the context of business law.
Dissolution refers to the process of legally ending a corporation's existence. This process involves settling the corporation's debts, distributing any remaining assets to shareholders, and officially notifying the government that the business is no longer in operation. Once a corporation is dissolved, it ceases to exist as a legal entity.
Cancellation, on the other hand, typically refers to the termination of a specific registration or permit related to the business, such as a business name or license. While cancellation might be part of the dissolution process, it does not mean that the entire corporation is dissolved. For example, a business owner might cancel a business name registration if they no longer wish to operate under that name, but the corporation itself might continue to exist.
Considerations When The Owner of a Company Passes
There are several critical actions to take when the owner of a company passes away:
Business Name Registration
For Sole Proprietorships and General Partnerships, the business is directly linked to the owner(s). If the owner of a Sole Proprietorship passes away, the business cannot be transferred and must either be canceled or allowed to expire naturally. In the case of a General Partnership, the deceased partner’s name can be removed and replaced with another, provided there are at least two partners remaining, including one original partner.
Incorporation
Corporations are owned by shareholders, and are run by the Board of Directors. If a director passes away, the executor can authorize the filing to remove their name, allowing the corporation to continue operating. This can also be done by a currently listed director. If the deceased was the only director of a corporation that has not commenced business, the executor may authorize the dissolution of the corporation. If the corporation has commenced business, the executor must be added as a director through a Notice of Change and can then sign for the dissolution.
CRA - Tax Implications
When a business owner retires or passes away, various tax and administrative steps must be taken. For retirement, this includes updating or canceling your business number and accounts with the Canada Revenue Agency (CRA). In the case of death, the executor must file the final tax return, settle any outstanding taxes, and close the business accounts. If the business is transferred to a successor, they must re-register for a new business number and tax accounts. Proper documentation and timely filing are essential to avoid penalties.
Articles of Dissolution
To officially dissolve the corporation, you must file Articles of Dissolution with the Ontario Business Registry, or Corporations Canada depending on the jurisdiction it is registered with.This document formally notifies the government that the corporation is no longer in operation. The Articles of Dissolution must be signed by an authorized director or officer of the corporation and submitted along with the required fee.
Licenses & Permits
After filing the Articles of Dissolution, you should cancel any licenses, and permits associated with the corporation. This might include canceling the corporation's tax accounts, and any other regulatory filings. This step ensures that you are not liable for any future obligations related to these registrations.
Bank Accounts
Once the corporation is dissolved, you should close any bank accounts and financial accounts associated with the business. This includes corporate bank accounts, credit cards, and investment accounts. Be sure to keep records of these closures as part of the corporation's final documentation.
Stakeholders
It is important to notify all stakeholders of the corporation's dissolution. This includes customers, suppliers, employees, and any other parties with whom the corporation has had business dealings. Providing clear communication about the dissolution helps to maintain professionalism and transparency during the process.
Dealing with the passing of a business owner is undoubtedly challenging, both emotionally and practically. The steps required to manage the business afterward can be complex, but with proper guidance, it is possible to navigate them successfully. Whether it's making necessary changes to a Business Name Registration, updating a corporation's directors, or handling tax obligations with the CRA, understanding the processes involved is important. Ontario Business Central is here to assist you through each step, ensuring that you can focus on honoring your loved one's legacy while maintaining the business they built. Properly managing these changes not only helps in keeping the business operational but also respects the legal and financial responsibilities that come with such a transition. By taking the right steps, you can ensure a smoother process during this difficult time, allowing you to make informed decisions for the future of the business.
