There is no approved list of reasons why entrepreneurs come to a decision to voluntarily liquidate an LLC. But, more often this happens when the business does not generate income, the project period and financing have expired, critical errors in the accounting statements were discovered, or market changes dictate new rules. Regardless of the reasons, correctly liquidating a business in Georgia is a long and rather complicated legal process, all stages that can be passed remotely by power of attorney. We have compiled step-by-step instructions for you, where everything is in order.
From what do you need to start?
All necessary procedures are described in detail in Articles 14 and 15 of the Law of Georgia “On Entrepreneurs”. There are 2 grounds for liquidation: voluntarily and by a court decision. Let us dwell on voluntary liquidation in more detail.
First preparatory stage.
After at the general meeting of founders you decide to start the liquidation process, you need to:
- Make sure that there are no debts and, if any, pay off;
- Submit an application to start the liquidation process and register with the Register (the process can be considered launched from the moment of registration);
- Pass a tax audit (most often a cameral one).
This stage basically consists of collecting all the necessary information about the current financial and economic condition of your LLC. While studying all this documentation, you should carefully check debts, stop production, close contracts with workers.
LLC liquidation procedure
The liquidation procedure takes 4 months (if there are no debts). During this time, the economic activity of the LLC is checked for compliance with the legislation of Georgia. The tax service checks the accruals and correctness of the payment of taxes and other mandatory payments. If you kept your accounting correctly and finished production processes without violations, then you should not be afraid of these checks – everything will go quickly and painlessly.
In the tax office, after filing an application for liquidation of the company in the Register, it is necessary to submit income tax returns for the last month in paper form, this can be done by your representative under a power of attorney and property tax for the last reporting year – also in writing.
For proper liquidation, it is imperative to go through the next step of the process – an inventory of the property of your LLC. It is worth considering this stage carefully, because the continuation of the liquidation procedure directly depends on it. As well as the closing of bank accounts of a legal entity, which must be completed on time.
After assessing the identified property, it will be possible to see whether there is enough money to pay off debts (if any) or whether it is necessary to sell the property of the liquidated LLC to pay them off. All proceeds from the sale are credited to the liquidation account, cover the debts and the balance is distributed proportionally between the founders. When all issues are settled, the liquidation account must be closed.
In the process of liquidating a company in the electronic tax office, one should report on income tax and property tax, and when there are no debts to the tax service based on the information provided, it is necessary to close the personal account by submitting a separate application. After that, the Revenue Service transfers the information to the Register.
The LLC liquidation procedure is considered to be successfully completed from the moment the corresponding entry is made in the Register.
We have described in detail how to properly liquidate a business in Georgia, but this applies to LLCs with a zero balance, that is, for legal entities that do not have actual debts, or whose assets are sufficient for repayment. In the event of bankruptcy or forced liquidation by court order, it is better to seek qualified legal assistance. Ordinary liquidation also causes many difficulties, especially when you do not have the opportunity to come to Georgia, you do not know the country’s legislation, or do not speak Georgian. If you are faced with the need to liquidate a business in Georgia, then leave a request and get a free consultation.