I'm closing my business. What do I actually need to do?

What to watch for

Six things that change how the closure actually plays out — most of which the procedural content treats as a single linear sequence rather than a sequence with material decisions at each step.

1. The first decision is solvent vs insolvent. It changes everything downstream. A company is solvent if it can pay its debts in full as they fall due — including tax debts and any other liabilities. If you can pay, both short-form removal and solvent liquidation are options, and the choice between them is mostly about cost vs certainty (more on that in #2). If you can't pay debts as they fall due, you're insolvent, and your obligations as a director shift sharply: you have a duty under section 135 of the Companies Act not to trade in a way that creates substantial risk of serious loss to creditors, and you have a duty under section 136 not to incur obligations the company can't reasonably perform. Continuing to trade through insolvency exposes you personally — directors can be held liable for losses creditors suffer.¹ If you're insolvent, the right move is to engage a licensed insolvency practitioner; voluntary liquidation through them protects you and gives the creditors a fair process. Don't try to short-form-remove an insolvent company — the IRD clearance won't issue, and you'll create personal exposure attempting it.

2. Short-form removal vs solvent liquidation — the call is about retained earnings and contingent liabilities, not just cost. Short-form removal under section 318(1)(d) is faster and cheaper (no filing fee; mostly your time), but it doesn't extinguish liabilities cleanly — directors and shareholders remain liable for any debts that surface after removal, and the company can be restored to the register if a creditor applies later. Solvent liquidation costs more (a licensed liquidator's fee, typically several thousand dollars) but produces finality — the liquidator clears all liabilities, the distribution is formally complete, and the company can only be restored by High Court order, which is rare. The decision rule: if your company has retained earnings to distribute (taxable as dividend with imputation credits, or sometimes capital tax-free if structured properly), or contingent liabilities you want closure on (warranties given on a business sale, tax positions IRD might revisit), or any uncertainty about what might surface later, solvent liquidation is worth the cost. If the company is genuinely empty — no assets, no retained earnings, no exposure — short-form removal is the right call.²

3. IRD clearance is the hard prerequisite for short-form removal. Plan around it. Section 318(3) of the Companies Act requires written notice from IRD that they have no objection to the company being removed.³ This means: all tax returns must be filed and current, all tax owing must be paid, the final GST return must be processed, and the company must request IRD clearance through the closing-down process on myIR. IRD now provides a standard form (IR315A, available from March 2026) for the no-objection request; it helps, but the step still isn’t instant. Plan the closure timeline around IRD clearance: file final returns, wait for processing, request and receive IRD clearance, then file the removal request. Allow roughly three months end-to-end from "final return filed" to "company off the register" — the IRD step plus the Companies Office notice-and-objection window are both real clocks. For companies with employees, this also includes the final payday filing, ACC reconciliation, and KiwiSaver finalisation — multiple final filings, not one.

4. Distribute the assets before you start the removal process. Not during it. Once a company is in the removal process — either after a solvent liquidator is appointed or after the section 318(1)(d) request is filed — moving assets out gets complicated. Best practice for short-form removal: settle all liabilities, distribute retained earnings (as taxable dividend, or capital-tax-free where structured properly), distribute capital to shareholders, file final tax returns, then apply for IRD clearance and removal. For solvent liquidation, the liquidator distributes the surplus as part of their formal process, which gives you the tax-treatment certainty (capital distribution on liquidation is tax-free; the same distribution outside liquidation may not be). The accountant's role here is real — getting the distributions done in the right order with the right tax treatment can save tens of thousands of dollars in tax on retained earnings, and getting it wrong can create personal tax exposure for shareholders. Don't try to handle this without the accountant; the cost-benefit on professional advice for closure is overwhelmingly in favour of advice.

5. Sole traders and partnerships have a simpler closure but the same tax-side discipline applies. A sole trader doesn't have a company to remove — you just stop trading. The tax-side work is still real: file your final IR3 covering the trading period to cessation, file the final GST return if you're registered, apply to cancel your GST registration through myIR (note that GST cancellation treats remaining taxable business assets as supplied at market value, which can create a final GST liability — see the entry on GST registration). Notify ACC if you've been paying business levies. If you've been paying provisional tax, the final-year reconciliation usually generates either a refund or a final balance due. The whole process is generally simpler than closing a company, but the timing matters. Partnerships dissolve under the Partnership Act 2019; the tax-side is a per-partner final IR3 covering each partner's share.

6. Employees, leases, and contracts. Untie the operational threads before closure. A company you're closing typically has live obligations beyond the tax-side: employees on payroll, a commercial lease, supplier contracts, customer commitments, software subscriptions, insurance policies. Each needs untying. Employees: redundancy procedure under the Employment Relations Act if the work is genuinely no longer required (section 4 good faith consultation, redundancy compensation as agreed in employment agreement, final pay including outstanding holiday pay). Lease: notice as required by the lease document (commonly 1-3 months); if the lease has time to run, negotiating an exit with the landlord may be necessary and may cost. Contracts: review each for termination clauses; some require notice or contain commitments that survive termination. Don't hit the "request removal" button until these threads are tied off — a company with active employment obligations or contractual liabilities can't credibly satisfy the IRD-clearance condition (no debts to anyone, full stop). The order of operations matters: untie the operational threads first, settle everything financial, file final returns, request IRD clearance, file removal.

A separate point on what closure actually accomplishes. The administrative work is bounded — short-form removal is genuinely simple if the company is genuinely empty, and even solvent liquidation is a several-week, several-thousand-dollar process that produces a clean outcome. What's harder is the operational judgment of whether you're really closing or you're considering closing because the business is going through a hard quarter. Closing a company that's structurally viable but currently struggling is expensive and irreversible — restoring a removed company costs more than it saved, and reincorporating to start again loses goodwill, tax history, and any pre-existing relationships. Closing a company that's genuinely run its course, or selling the business and winding the company up afterwards, or moving the assets to a new vehicle for a different venture — those are all defensible closure scenarios. The diagnostic is whether the closure is the destination or the escape. If it's the destination, the process is bounded; if it's the escape, the same effort applied to the underlying problem usually produces a better outcome. The best time to engage with a closure decision is upstream of the urgency that forces it.

Where this entry stops

This entry covers the decision tree for closing a solvent business and the procedural sequencing that protects you. It doesn't cover:

• Insolvent liquidation specifically. If the company can't pay its debts, you're working with a licensed insolvency practitioner from the start; the directors' duties side and the creditor priority side are specialist territory beyond this entry's scope.
• Selling the business as an alternative to closure. Different decision shape; a future wayfinder entry will cover the pre-broker decisions.
• Tax-efficient retained-earnings distribution mechanics. The accountant's territory; this entry flags that it matters but doesn't substitute for the advice.
• Restructuring rather than closing. If the goal is to move to a different structure (sole trader to company, company to a different company, restructuring shareholders) rather than close fully, that's adjacent but distinct.
• Personal tax consequences for shareholders on dividend distributions or capital returns. Shareholder-side tax; the company-side flagging is in this entry, the shareholder-side belongs with their accountant.

For the procedural detail on short-form removal, the Companies Office page covers the application form. For final tax obligations, Inland Revenue's closing-a-business pages carry the operational specifics. For solvent liquidation, you'll be working with a licensed insolvency practitioner — the Restructuring Insolvency and Turnaround Association of New Zealand (RITANZ) maintains a directory of accredited practitioners.

Last verified 27 May 2026. Full source list: references.