How tedious and expensive is it to close a small (tourism) company?

[Galong]

After 25 years the Mrs. and I are ready to close our small tour company. I'm almost 70 and I'm burnt out dealing with it all. I've read that it can be tedious and time-consuming to close a company. We have no debt and all shareholders are on board. Does anyone here have any experience in closing a company? My accountant said it'll be between 20k and 25k baht for her to do it and it could take a couple of months. 

Any insight on what to do and not to do in preparation for closing a company would be greatly appreciated. 

[OneMoreFarang]

I was told by an accountant that it takes time.

I think the main part was that "you" have to wait for possible invoices which the company has to pay.

Even if you know there are no invoices open, that doesn't mean the authorities know that.

 

[Etaoin Shrdlu]

I think your accountant is correct and the cost seems reasonable. I believe there is a bit of paperwork and a waiting period before the company can be legally wound up and formally closed. I also think that the books must be available for inspection for a period of time even after the company is closed. The accountant should be available during this time to explain the books if the Revenue Department comes for an audit, so the fee should also include this service. 

[Galong]

14 minutes ago, OneMoreFarang said:

I was told by an accountant that it takes time.

I think the main part was that "you" have to wait for possible invoices which the company has to pay.

Even if you know there are no invoices open, that doesn't mean the authorities know that.

 

Yeah, that's what I expect. We're a small and uncomplicated company, so there's not much to wait for... historically-speaking, they'll see that we're low volume. 

[Galong]

3 minutes ago, Etaoin Shrdlu said:

I think your accountant is correct and the cost seems reasonable. I believe there is a bit of paperwork and a waiting period before the company can be legally wound up and formally closed. I also think that the books must be available for inspection for a period of time even after the company is closed. The accountant should be available during this time to explain the books if the Revenue Department comes for an audit, so the fee should also include this service. 

I'm expecting everything you mentioned. I don't think the Rev Dept would waste much time on us as we're a 'peanuts' size company... small fish 😉

It'll be time for a huge sigh once it's done and dusted. It's also not easy letting go of something we built from nothing.  Oh well, everything ends at some point. 

[timendres]

If you are a registered company, there is also a process involving the royal gazette (IIRC), where the closure must be posted and a waiting period endured, allowing shareholders time to react. Think about a large company with many shareholders. Those shareholders need notification and time to react to the announcement. Not very applicable to a small company with two shareholders, but the same rules apply regardless. You also need to notify the DBD to unregister the company, and there is a process there. Be sure to close any bank accounts you have before you unregister at the DBD, or you will find it nearly impossible to close those bank accounts after.

 

I timed my closing with the end of the fiscal year. I paid for usual audit, and, I think, another 22,000 THB for the accountant to handle everything mentioned above. That is in Bangkok.

Edited September 26 by timendres

[Galong]

6 minutes ago, timendres said:

If you are a registered company, there is also a process involving the royal gazette (IIRC), where the closure must be posted and a waiting period endured, allowing shareholders time to react. Think about a large company with many shareholders. Those shareholders need notification and time to react to the announcement. Not very applicable to a small company with two shareholders, but the same rules apply regardless. You also need to notify the DBD to unregister the company, and there is a process there. Be sure to close any bank accounts you have before you unregister at the DBD, or you will find it nearly impossible to close those bank accounts after.

 

I timed my closing with the end of the fiscal year. I paid for usual audit, and, I think, another 22,000 THB for the accountant to handle everything mentioned above. That is in Bangkok.

We're small with 3 shareholders... all Thai family members. I'm not a shareholder. We are VAT registered. We had a couple of big years and the gov told us we had to register for VAT. 

Thanks for letting me know about closing the bank before unregistering! 

[NoDisplayName]

Why not sell it?

 

Let the lawyers handle it, you just sign a few papers.

[Galong]

3 minutes ago, NoDisplayName said:

Why not sell it?

 

Let the lawyers handle it, you just sign a few papers.

That's what we originally wanted to do. We wanted to sell it to the staff, particularly to the lead guide. However, our accountant said that just taking my wife's name off of all of the papers doesn't remove her from liability if he (the guide) screws something up.  That doesn't sound reasonable, but I wouldn't be surprised if she's not right. 

I wonder if we can at least sell him the websites (we have two) and he can form his own company? 🤔  I'm sure he wouldn't be legally allowed to call it the same name though.

It seems like closing a company is more challenging than opening one. 

[NoDisplayName]

That's the thing.  Closing it down seems to be ueber-complicated.  Selling the entire business to a new party, other family shareholders would sell out as well, must happen all the time,  with no potential liabilities for former officers of the company.

 

Find a zero-dollar budget tour operator that wants to get into the great Thailand experience and sell the whole thing - name, websites, assets, everything.  Would be much simpler for them to buy an operational tour business than starting from scratch.

[Galong]

1 minute ago, NoDisplayName said:

That's the thing.  Closing it down seems to be ueber-complicated.  Selling the entire business to a new party, other family shareholders would sell out as well, must happen all the time,  with no potential liabilities for former officers of the company.

 

Find a zero-dollar budget tour operator that wants to get into the great Thailand experience and sell the whole thing - name, websites, assets, everything.  Would be much simpler for them to buy an operational tour business than starting from scratch.

yeah, everything you're saying is EXACTLY what I thought.  Maybe I need a second opinion. My accountant has always looked out for us, but perhaps she's not right this time. We should talk to our attorney. 

However, the guy who would likely buy the company will NOT run everything above board. He'll run it without declaring income for one thing... kinda like most small businesses seem to do. My wife's name WAS on everything and that's on record, so I'm not sure about any retroactive liabilities.  Darn, why does everything have to be so challenging? We just want to stop or sell, period.

[timendres]

1 hour ago, Galong said:

yeah, everything you're saying is EXACTLY what I thought.  Maybe I need a second opinion. My accountant has always looked out for us, but perhaps she's not right this time. We should talk to our attorney. 

However, the guy who would likely buy the company will NOT run everything above board. He'll run it without declaring income for one thing... kinda like most small businesses seem to do. My wife's name WAS on everything and that's on record, so I'm not sure about any retroactive liabilities.  Darn, why does everything have to be so challenging? We just want to stop or sell, period.

 

I actually did purchase my company from another party.

It is a mixed bag.

The real risk, in my opinion, is to the purchaser.

They inherit the company's financial history.

In my case, that was a costly mistake.

From the buyer's perspective, a new company, if possible, is always better.

For the seller, assuming that the sale is complete and "clean", there should be little risk.

However, if there is anything "lurking" in that company, the new owner might try to claw back some of the purchase price.

I believe that, if you "cleanse" the company financially, and you remove your ownership 100%, you should be okay.

Ideally, bank accounts are closed and re-opened.

 

[Galong]

23 minutes ago, timendres said:

 

I actually did purchase my company from another party.

It is a mixed bag.

The real risk, in my opinion, is to the purchaser.

They inherit the company's financial history.

In my case, that was a costly mistake.

From the buyer's perspective, a new company, if possible, is always better.

For the seller, assuming that the sale is complete and "clean", there should be little risk.

However, if there is anything "lurking" in that company, the new owner might try to claw back some of the purchase price.

I believe that, if you "cleanse" the company financially, and you remove your ownership 100%, you should be okay.

Ideally, bank accounts are closed and re-opened.

 

Thanks a LOT for the personal insight... very helpful. We'll look into this further.

There is nothing 'lurking'. There is no debt and nothing but potential for success.  I'd prefer to sell it. 

[couchpotato]

3 hours ago, Galong said:

After 25 years the Mrs. and I are ready to close our small tour company. I'm almost 70 and I'm burnt out dealing with it all. I've read that it can be tedious and time-consuming to close a company. We have no debt and all shareholders are on board. Does anyone here have any experience in closing a company? My accountant said it'll be between 20k and 25k baht for her to do it and it could take a couple of months. 

Any insight on what to do and not to do in preparation for closing a company would be greatly appreciated. 

Accountant is correct.  Better to have a lawyer do it (unless the accountant guarantees she/he has the means) as the there are rules that must be followed. There must be adverts in the newspaper informing that the Company will close and if any person has claims on the Company whatsoever, they can lodge them.

The process can take 2-3 months.

Of course a full accounting (including taxes) must be filed.

[NoDisplayName]

3 hours ago, Galong said:

Maybe I need a second opinion. My accountant has always looked out for us, but perhaps she's not right this time. We should talk to our attorney. 

 

Eggzackly!

Accountant ≠ Attorney

Different skill set.

[FritsSikkink]

15 hours ago, Galong said:

After 25 years the Mrs. and I are ready to close our small tour company. I'm almost 70 and I'm burnt out dealing with it all. I've read that it can be tedious and time-consuming to close a company. We have no debt and all shareholders are on board. Does anyone here have any experience in closing a company? My accountant said it'll be between 20k and 25k baht for her to do it and it could take a couple of months. 

Any insight on what to do and not to do in preparation for closing a company would be greatly appreciated. 

Listen to your accountant and lawyer.

Edited September 27 by FritsSikkink

[Galong]

13 hours ago, couchpotato said:

Accountant is correct.  Better to have a lawyer do it (unless the accountant guarantees she/he has the means) as the there are rules that must be followed. There must be adverts in the newspaper informing that the Company will close and if any person has claims on the Company whatsoever, they can lodge them.

The process can take 2-3 months.

Of course a full accounting (including taxes) must be filed.

My accountant and her team offer many services, including closing companies. She says she's had a few companies close this year without any issues. 

We also have a lawyer that we used for making our Wills. We'll ask him if he's familiar with the process of closing a business and if he can help.

I'd really prefer to sell it if at all possible. It would be less hassle, BUT if there is any risk involved for my wife (the director) after the sale, then closing in the way we'll go. I just want it over. 

[LukKrueng]

21 hours ago, Galong said:

That's what we originally wanted to do. We wanted to sell it to the staff, particularly to the lead guide. However, our accountant said that just taking my wife's name off of all of the papers doesn't remove her from liability if he (the guide) screws something up.  That doesn't sound reasonable, but I wouldn't be surprised if she's not right. 

I wonder if we can at least sell him the websites (we have two) and he can form his own company? 🤔  I'm sure he wouldn't be legally allowed to call it the same name though.

It seems like closing a company is more challenging than opening one. 

I'm in a similar position. A couple of years ago someone offered to buy my company but insisted that 1 of the shareholders would remain for 1 year. Didn't like the idea of having no influence on what's going on yet still carry some responsibility (was supposed to be left with 1 share).

Now I'm considering closing the company.

According to my accountant, and I heard it from other sources as well, of you have a working company and close it, the tax and VAT departments will audit the company and will always find a missing payment or penalty to be paid. The easiest way according to all those sources is to stop all activities of the company and keep submitting 0 revenue reports for 3 years. Then you can easily close the company with no hassles. Done it years ago with another company I had, and the closure was just a formality.

[Galong]

4 hours ago, LukKrueng said:

I'm in a similar position. A couple of years ago someone offered to buy my company but insisted that 1 of the shareholders would remain for 1 year. Didn't like the idea of having no influence on what's going on yet still carry some responsibility (was supposed to be left with 1 share).

Now I'm considering closing the company.

According to my accountant, and I heard it from other sources as well, of you have a working company and close it, the tax and VAT departments will audit the company and will always find a missing payment or penalty to be paid. The easiest way according to all those sources is to stop all activities of the company and keep submitting 0 revenue reports for 3 years. Then you can easily close the company with no hassles. Done it years ago with another company I had, and the closure was just a formality.

Thanks for the details. Yes, I would fully expect the revenue department to come up with some reason to extract a bit of cash from us. 

Interestingly, I was just reading about the dormant company option. That does sound like a viable option.  HOWEVER, my wife just talked to our lead guide and he seems quite interested in buying the company. I'll meet with him in the morning and work out the details.  🤞🤞

[Galong]

4 hours ago, LukKrueng said:

According to my accountant, and I heard it from other sources as well, of you have a working company and close it, the tax and VAT departments will audit the company and will always find a missing payment or penalty to be paid.

I wonder what the chances are of an audit when selling a company. What would be your guess?  From talking with business friends and reading online, it seems like my wife (director) would no longer be responsible for anything happening with the company, which is exactly what we want.  We just want to retire and finally have no business responsibilities or concerns. 

[LukKrueng]

11 minutes ago, Galong said:

I wonder what the chances are of an audit when selling a company. What would be your guess?  From talking with business friends and reading online, it seems like my wife (director) would no longer be responsible for anything happening with the company, which is exactly what we want.  We just want to retire and finally have no business responsibilities or concerns. 

Not sure about audit when selling. Thinking about it - this MIGHT be the reason the buyer wants one of the shareholders to stay on the book for 1 year. This request came from 2 potential buyers. My accountant said it should not be a problem, but if the sale process will go forward I will also consult with a lawyer and see if we can draw a contract that will keep us from getting into trouble.  

[NativeBob]

5 hours ago, LukKrueng said:

The easiest way according to all those sources is to stop all activities of the company and keep submitting 0 revenue reports for 3 years. Then you can easily close the company with no hassles. Done it years ago with another company I had, and the closure was just a formality.

Done the same. Just keep your contacts updated with Rev.Dept. 

And this is free

[Galong]

51 minutes ago, LukKrueng said:

Not sure about audit when selling. Thinking about it - this MIGHT be the reason the buyer wants one of the shareholders to stay on the book for 1 year. This request came from 2 potential buyers. My accountant said it should not be a problem, but if the sale process will go forward I will also consult with a lawyer and see if we can draw a contract that will keep us from getting into trouble.  

Responsibility for an audit might be something that could be added to a Share Purchase Agreement (SPA). I would look into this as well before selling. 

[Patong2021]

On 9/26/2024 at 8:21 AM, Galong said:

yeah, everything you're saying is EXACTLY what I thought.  Maybe I need a second opinion. My accountant has always looked out for us, but perhaps she's not right this time. We should talk to our attorney. 

However, the guy who would likely buy the company will NOT run everything above board. He'll run it without declaring income for one thing... kinda like most small businesses seem to do. My wife's name WAS on everything and that's on record, so I'm not sure about any retroactive liabilities.  Darn, why does everything have to be so challenging? We just want to stop or sell, period.

 

Consider an Asset sale. You sell the physical assets and retain the company rights.

This is what is done with the purchase of bankrupt or failing companies or companies with legal issues. (Not a reflection on you or your company). Typically, the purchaser wants the inventory or some other property like a company brand name or location leases without the legal issues that attach to the company. In your case, you wish to monetize whatever the asset value is, while retaining legal rights that  would protect you. A website, a lease, a client list, a general company name are all assets.

This is an option to discuss with both accountant and legal counsel. 

 

[Galong]

9 hours ago, Patong2021 said:

 

Consider an Asset sale. You sell the physical assets and retain the company rights.

This is what is done with the purchase of bankrupt or failing companies or companies with legal issues. (Not a reflection on you or your company). Typically, the purchaser wants the inventory or some other property like a company brand name or location leases without the legal issues that attach to the company. In your case, you wish to monetize whatever the asset value is, while retaining legal rights that  would protect you. A website, a lease, a client list, a general company name are all assets.

This is an option to discuss with both accountant and legal counsel. 

 

Thanks for the info.

Since my previous post, our lead guide wants to buy the company. I spoke with him at length this morning. This is exactly how we wanted it to happen, but wanted optional plans in case it didn't, thus this thread.

I'm not retiring for 8 months, so a lot of time will be spend ironing out the details and covering all of the bases.