How to Close a Business in the Philippines

Starting, formalizing, legalizing, and registering a business in the Philippines could take time depending on the type of your company. But if the process of business registration takes time, business closure or cessation is even more difficult and could take longer time to actually accomplish, depending on the status of the business.

There are many reasons why a certain business will come to its end. It could be that the business is already causing the owner significant losses and decided to just stop the business or it could be that the business needs to be terminated in order to transform into a new type of business. Not all business closure brings negative news. For example, a single proprietorship business that is transforming into a corporation is required to be closed as a proprietorship. Thus, business closure could also mean expansion.

The process of business closure in the Philippines depends on the type of the company to be ceased. For corporations and partnerships, they should be formally close in the Securities and Exchange Commission (SEC) where they are also registered, unlike sole proprietorship businesses that are not. There are also businesses that should comply with the closure requirements of other government agencies, where they are specially regulated. For example, pawnshops are also required to be closed in Bangko Sentral ng Pilipinas (BSP), where they are also governed or regulated.

Businesses can also be closed voluntarily or involuntarily. Voluntary closure generally means the business owner close the business in his or her own will, usually complying with applicable business regulations. On the other hand, involuntary closure means the business is closed due to events, such as failure to comply with the law or regulations and the government or court has ordered to close the business. In this article, we assume that the business owner is voluntarily closing the business.

Usually a business should be closed in the following government agencies/offices.

• Department of Trade and Industry (DTI) office
• The local City/Municipal Office, where the business is registered
• Department of Labor and Employment (DOLE) office, if the company has employees
• Bureau of Internal Revenue (BIR) office
• Bangko Sentral ng Pilipinas (BSP), if the business is registered with the office
• Securities and Exchange Commission (SEC) for partnership and corporation
• Other agencies or offices where the business is registered, such as SSS, PHIC and HDMF

To guide you on the formal cessation of your business, here are some of the basic steps, procedures and requirements on how to close a business in the Philippines.


Closing a business at DTI

According to the DTI, we still have to inform the office when we voluntarily close our business, and apply for cancellation of our registered business name (BN).

For Sole Proprietor, the following are the requirement for Voluntary Cancellation.

• Letter request signed by the owner
• Affidavit of cancellation of the registered BN, stating the reason/s for the cancellation and that the registered owner has no outstanding financial obligation at the time of closure of establishment
• Original copy of the BN certificate and the duplicate copy of the application form (affidavit of loss if either the business name certificate and/or the duplicate copy of the application form was lost)

For Corporation and Partners, the following are the requirements for Voluntary Cancellation.

If dissolved at the Securities and Exchange Commission (SEC),

• Letter request signed by the authorized signatory (Board Resolution for the authorized signatory)
• Certified photocopy of the SEC certificates of dissolution of the corporation/partnership
• Original copy of the business name certificate of registration and the duplicate copy of the application form. (Affidavit of loss if either the business name certificate and/or the duplicate copy of the application form was lost)

If BN Registration Only,

a. Corporate Name:
• Letter request signed by the authorized signatory (Board Resolution for the authorized signatory)
• Board resolution/partnership agreement for the cancellation of the registered business name stating that the Corporation/Partnership is retiring from business; surrendering the business name certificate for cancellation and that at the time of closure of establishment the business has no outstanding financial obligation, or a certified copy of the Certificate of Dissolution (if applicable)
• Original copy of the business name certificate and the duplicate copy of the application form (Affidavit of loss if either the business name certificate and/or the duplicate copy of the application form was lost)

b. Adopted Name:
• Letter request signed by the authorized signatory (Board Resolution for the authorized signatory)
• Board Resolution/Partnership agreement for the cancellation of the registered business name, stating the reason/s for the cancellation that the corporation/partnership has no outstanding financial obligation at the time of closure in connection with the operation of the said business and if there were creditors copy of notice to them
• Original copy of the business name certificate and the duplicate copy of the application form (Affidavit of loss if either the business name certificate and/or the duplicate copy of the application form was lost)


Closing a business at the local City/Municipal Office

The procedures and requirements on closing a business may vary among different LGUs (Local Government Units). This means that the requirements for business cessation in Makati City can be different in Manila or Pasay City. The typical requirements for business closure at the LGUs are the following:

• Affidavit of Gross (reason for and date of closure)
• Mayor’s Permit
• Business Plate
• Financial Statement/ ITR
• Sketch
• Latest Payment
• Certificate of Closure from the Barangay Captain indicating date of closure

For more complete and accurate procedures and requirements, you may visit and inquire the City or Municipal Office where your business is registered.


Closing a business at DOLE

If your business has employees or was required to be registered with the DOLE, you also have to ensure that you notify the DOLE office and comply with the labor requirements to avoid labor relation liabilities. The following are the basic requirements in closing a business and be cleared at the DOLE office:

• Service of a written notice to the employees and the DOLE at least one (1) month before the intended date of closure/cessation
• The closure or cessation of business operations is bona fide in character.
• Payment to the employees of termination pay amounting to at least one-half (1/2) month pay for every year of service, or one (1) month pay whichever is higher, per Philippine Labor Code mandate.


Closing a business at the BIR

The process of business cessation at the BIR is perhaps the most tedious one among others. And if you have unpaid tax liabilities or delinquencies due to the government, the process could even get more problematic. Among the government offices, where your business is registered, the BIR is the one which records and monitors your internal revenue taxes, such as income and business taxes (Value Added Tax or Percentage Tax). And to formally close and clear your business with the BIR, the bureau has to ensure that you have already paid all your tax obligations.

BIR Form 1905 (Application for Registration Information Update) is the tax form used in applying for closure of a business. The following are the requirements and procedures for closure of business at the BIR.

Documentary Requirements
1) Letter of request stating reason for termination of business
2) Original Certificate of Registration
3) Books of Accounts
4) Inventory List of Unused Receipts and Invoices
5) Unused Receipts and Invoices for cancellation
6) Board Resolution / Notice of Dissolution (if Corporation / Partnership)

Additional Requirements in Case of Death of Individual Taxpayer:
1) Death Certificate
2) Payment of Estate Tax, if any

1) Taxpayer applicant files BIR Form 1905, together with the attachments at the RDO where they are registered within ten (10) days from retirement of business.
2) Taxpayer files short period return for income tax purposes.
3) RDO verifies if taxpayer has open cases reflected in the Integrated Tax System (ITS). If YES, ask taxpayer to submit required returns and pay the corresponding tax due/s and penalties if any.
4) RDO verifies if taxpayer has delinquent cases at the Assessment, Collection, and Legal Divisions of the Region;
5) RDO verifies if taxpayer has delinquent cases at the Collection Enforcement Division, BIR National Office
6) RDO requests for Letter of Authority to investigate internal revenue taxes for all un-audited taxable years prior to cancellation of business.
7) Assigned Case officer conducts investigations for period/s covered in the issued Letter of Authority.
8) Taxpayer complies with requirements of audit and pays corresponding deficiency taxes resulting from audit using Form 0605.
9) RDO issues tax clearance for closure of business.
10) RDO updates ITS and cancels TIN of taxpayer (for non-individual taxpayer).


Closing a business at SEC

For corporations and partnerships, they cannot process closure of business with the SEC if they are not yet done in securing tax clearance from the BIR and endorsements or certificate of registration cancellation from other government offices, if applicable. Thus, even though the business is already non-operating, it still remains as a registered business. Though, the business owners, partners, or shareholders can already start the liquidation process of its assets, subject to applicable taxes.

For corporations, corporate dissolution can be voluntary or involuntary. In this discussion, we assume that we are voluntarily dissolving a corporation. Moreover, voluntary dissolution of a corporation may have different procedures, depending on whether the dissolution will affect creditors or not. One way to voluntarily dissolve a corporation with the SEC is by shortening its corporate term. The following are the requirements for corporate dissolution by shortening its term.

1. Directors’ Certificate – A Notarized document signed by majority of the directors and corporate secretary certifying the amendment of the articles of incorporation shortening the corporate term, the votes of the directors and stockholders thereto, and the date and place of the stockholders meeting
2. Amended Articles of Incorporation
3. Audited financial statements as of date of the stockholders meeting approving dissolution or any date thereafter
4. List of creditors, if any, and their consent, or certification as to non- existence of creditors
5. BIR Tax Clearance
6. Publisher’s affidavit of the publication of the dissolution of the corporation (once a week for three (3) consecutive weeks)
7. Endorsements/clearances from other government agencies, if applicable

Take note that if there are creditors and their consent was not secured, the application should be in the form of a petition to be filed with Office of General Counsel of the SEC.


Other notes to remember

When closing a business in the Philippines, we have to formally close the business in the government agencies where it is registered. We have to notify those offices and comply with their requirements to get a clearance or certificate of termination (cancellation of registration) of our business. Thus, a business owner has to ensure that his or her business is cleared in every government agency it is registered aside from the ones discussed above.

For businesses registered and regulated by the Bangko Sentral ng Pilipinas (BSP), such as pawnshops, money changers, banks, and financing companies, they have to comply with the closure requirements of the office. For cooperatives, instead of closure at the SEC, it should comply with the CDA (Cooperative Development Authority) Office for cessation or dissolution.

Furthermore, if your business employs people and is contributing to SSS (Social Security System), PHIC (Philippine Health Insurance Corporation) and HDMF (Home Development Mutual Fund) for employees as mandated by our laws, then you also have to apply for cancellation of your business or employer’s registration when you close your business to stop your obligation as a contributing employer.

Department of Trade and Industry, Security and Exchange Commission, Bureau of Internal Revenue, Philhealth, Social Security System, Department of Labor and Employment, Department of Interior and Local Government, Bangko Sentral ng Pilipinas


Disclaimer: This article was written and published for informational use only. There may be other important information that we might have missed to discuss in relation to the topic discussed above. Furthermore, new and subsequent rulings, issuances, laws, and mandates related to the topic that will occur in the future may render the whole or part of the article obsolete or inaccurate. Moreover, the content in this article is not provided to serve as legal, tax, or investment advice. Hence, we do not guarantee and is not liable for the accuracy or completeness of any information provided herein or in any outcome as a result for using this information.

Victorino Abrugar is a retired CPA practitioner, a blogger, speaker, and an entrepreneur. He's the President of Optixor, Inc., a digital marketing company based in the Philippines. Follow him on Twitter at @viclogic.


  1. Juliet Sacdalan says

    Is there a need for us to formally close our business which are just registered in SEC/BIR/SSS/PAGIBIG/PHILHEALTH for almost 5 months, but business did not pushed through?

      • Carmina says

        Sir,pano po Kung di naman umabot sa bir ang registration at hanggang mayor’s business permit Lang , kailangan p b to formally close it sa bir? Hindi din naman kasi nagamit yung business. Thanks

      • says

        You may only cancel the registration of the business in the office where it is registered. However, if you started business operation and earn income without registering the business with other agencies and without paying the applicable fees and taxes, and the BIR will find out – they might assess your deficiencies.

  2. julz says

    sir do we need to have SPA if for example the owner is not in the country anymore? can I be the one to process all the cancellations of the business myself? the owner let me handle the closure of her business because she suddenly had to leave for work abroad. Can you help me about this? ’cause i don’t really have an idea about where to start really.. please help..

    • says

      Yes. That’s right. As I mentioned, you have to close your business at the offices where your business was registered. You have to obtain certificate of closure to the offices that issued certificate of registration to your business. So if your business is registered at the barangay, at DepEd, BSP, etc, you have to get clearance or closure from them once you close your business.

  3. miles hernandez says

    sir ask ko lang kasi 2008 pa hindi nagooperate ung business at di start dn nun di ako nakapagfile ng income statements ko.ano ba dapat gawen.kung idedeclare ko na bang iclose ung business problema ko kasi wla na rin ung cor kasi nawala nung ex ko pati mga resibo at di ko na sya makita ko man sigurado wla na sa tagal..ninakawan nya kasi ako at nagibang bansa ako at pagbalik ko wla na lahat..pasensya na po sa abala..

  4. Mabel Butron says

    Sir good day,
    In Corporation who is allowed to transact in closing the business?
    I am not member of the said corporation, but the owner of the business
    assigned me to close his business because of no operation.
    I am capable to do?

  5. Peter Salcedo says

    Napakalaking tulong po ng article na ito.

    Sir nagparegister ng business ang ate ko noong 2007 at nag expire ito noong 2012.

    1 year lang nag-operate ang business ng ate ko pero hindi niya ito isinara sa mga ahensya kung saan sya nagparehistro (DTI, City hall, Bargy, Bir).

    Noong 2009 ay hiningi ko sa kanya ang mga hindi nagagamit na Official receipt ng kaniyang business dahil nagkaroon ako ng home-based business.

    Dahil maliit na negosyo lang naman at hindi malaki ang aking kinikita ay hindi ako nagbayad ng tax simula 2009.

    Ngayon po ay nais kong formally isara ang business ng aking ate at magparehistro ng sarili. Ayaw kasi ng ate ko na magkaproblem siya sa future.

    Paano po ba ang aking gagawin kung 3 years akong hindi nagbayad ng tax? Paano ko po formally iko-close ang business ng aking ate?

  6. Melvin says

    Sir, ask ko lang, cancel na kasi yong bir registration.So, company no longer withheld tax for BIR to its employees. Paano ba yong withholding tax ng employees na ngextend to perform dissolution and liquidation process?We will pay individually for annual income tax or Form 2316?Thanks.

  7. Ian says

    Hi Sir,
    Thanks for the informative article. Aside from this, my queries lang po sana ako.eto po scenario…

    I have one contact person who wants to ask my assistance. The corporation is like a distributing/advertising/importing firm wherein they have client outside the country. The client needs someone to market their product locally (pesticides). Therefore, the said client forwards their products here at Phils and the said entity was given a commission by distributing it to local stores. The corporation was incorporated last 2010, registered to the government agencies and started commercial operation on February 2011, with 1 to 2 employees, and with one client doing transaction with 2 instances during 2011… (complied with BIR and SSS, PHIC, HDMF promptly) and comes December 2011, the only client withdrew. After which, no transactions occur starting 2012 to date. No BIR, SSS, PHIC HDMF etc filed since then and no employee as well. April 2012, they filed a non operation letter to BIR.

    The management decided to close the business. Is it possible that the corporation/company will not expressly wind up?is there such thing as natural death and and just leave it as non operation…?Thanks

    • says

      It should be formally closed not only with the SEC, but also with other agencies, especially the BIR or your tax filing obligation will continue. You should secure a certificate of registration cancellation for all the agencies where your business is registered – SEC, City Mayor Office, BIR, SSS, Philhealth, etc. Join us in our forums for more discussion on this matter.

      • says

        you will have open cases with BIR for sure. you need to file returns with BIR even if you have no transactions. there is no such thing as natural death in BIR.

        however, for SEC purposes, they may revoke your certificate of registration for your continuous inoperation of five years (meaning you have not submitted any reports required to be submitted to them such as AFS, GIS etc etc).

  8. Mack says


    What are the penalties that I may face for not formally dissolving a partnership business?
    I am part of a Partnership Business that me and my 2 other partners would like to close, but unfortunately the original articles of partnership and other certificates are being held by one of our partners who is very incompetent and always unavailable. I fear that our desire to dissolve the business might go unprocessed or probably take too long because of him. It is only a small business but never really earned or operated, just registered and usually filed as “no operation /no sales” in our monthly BIR tax forms. In short, our business does not operate nor earn anything since it was created in SEC, and the relationship of partners has gone sour and unavailable at most times, being the reason of our decision to dissolve it.

    I would like to ask, what would be our problems or liabilities in the future if we fail to dissolve it and just stop filing forms in BIR? Have you known any stories of people who has been severely penalized or jailed for not closing a small almost non-operational business like ours?

  9. Anna Ayalde says

    Hi sir
    May concern lang po ako regarding sa cityhall, we closed our business last aug 2013 pa under my hubby’s name. Meron po kasi kami accounting office na sila nag aasikaso lahat. Then ngayon po they told us na we have to pay the renewal of our mayor’s permit which made us so irritated. Does it mean na hindi po nila nafile for closure sa cityhall. Please advise kung ano po best gawin. Thank you so much!!

    • says

      You can ask for a certificate/clearance of business closure from your accountant. If they can’t provide it to you, then it means they have not completely closed your business with that particular government office.

  10. riza monterey says

    Hi sir, what are the procedures in filling a Corporation as Non-operational? do we need to secure business permits & BIR tax returns pa din ba after we file to the BIR Affidavit of Non-Operation? What is the difference in Closing the business/ Corporation Vs. declaring its non-Operation having no Income & employees?


  11. odel nipales says

    hi sir,

    i have a business for a year but with no transaction since we started. now were planning to close the business. can we go straight to BIR for filing of closure. do i need to go to municipality where my business are located. is a homebased business actually. thanks

  12. Ronel says

    Hi Sir,
    Maybe this is out of the topic, pero baka masagot nyo rin po. We are existing as a branch using our parent Company name. What if our company are creates a subsidiaries or other company name and instruct us to use this as our new Company name in our branch. Are we need to close our existing Company name in LGU’s and in other government agencies where our branch located?

  13. JR ASTUDILLO says

    hi sir! ask ko lang po, after po ba mag file ng closure ng business, i aaudit pa po ba ng BIR yun inventory ng stocks? kasi po two years nang close yun business namin pero ngayon palang po namin ifile ng closure, eh wala na po yun mga stocks naming tira, nabigay na po namin sa red cross and simbahan as donations nun mga nakaraang bagyo..thanks po.

  14. Ryan Joseph says

    Hello Sir,

    Sir i-clarify ko lang po, self-employed po ako, bale insurance agent. I’d like to cancel my certificate of registration already with BIR and find a job instead. My question is, will my place of business (my house) be inspected by BIR during the cancellation process? Salamat po!

  15. Joy Fazon says

    Sir if I may ask lang po is there a fee in closing the business sa SEC partnership po kami and the business is a printing press?
    Your answer will be a big help po

  16. Richard Mercines says

    Dear Sir,
    We are a corporation with 8 members (including our CEO). We have agreed to sell our ownership to our CEO and he will nominate 4 new partners. We have no operations but we are updated in all our obligations especially with the BIR. Can we ask what is the procedure of SEC for this type of situation? Thank you..

  17. Eunice Yabut says

    Thank you for this very informative article.
    We are into Construction business and the company is originally from Korea. They got a project here in Bataan but almost finish(maybe next month) and will be getting another project in Quezon Province August of 2015, the company will not be operational for about 10 months, do we need to formally close it or just get a clearance from local offices in Bataan?thanks

  18. gel says

    hi sir,

    I have a canteen last 2011-2012 then i have mayors permit but i didnt registered that in BIR. The business was closed july 2012 then after that I get a tin number for my employment in BIR then I found out that I registered my business there and I have also a tin.. which is I never really do that because it is just a small canteen..

    Do I need to get my own lawyer to prove that its not really me who registered that on BIR?

  19. Maria Cristina Ondes says

    Good day! May i ask for your help regarding our case? The company has been previously monitored with a wrong address stated in the articles of incorporation through Case monitoring System of SEC. After paying the penalties due but before amendment of the articles, the board has decided to close the corporation due to continuous loss. Should we amend the articles first before applying for a closure in city hall, BIR and SEC? Thanks. :)


    Hi Sir,

    Gusto ko po sana malaman kung paano ang gagawin in our case, we are Cooperative Business and we are just one of a branch which our main office was located in General Santos while our branch was located here at Cainta we already processed everything about business permit, mayors permit, City hall requirements and etc. everything are complete at nakapag-render n kmi ng business for almost 2 months though we registered our business last sept. 2014. ngyon po we are planning to close asap the business due to unavailability of our products and we can’t supply all the demands of our beloved customers, paano po ba ang procedure ng BIR and Municipal Closure eh halos di po nmin nagamit ang mga receipts namin. Sana po matulugan nyo po kami.salamat ng marami in advance

  21. Ernie Barrera says

    I am a newspaper retailer. With my meager income selling newspaper where sales goes down yearly, I found it very hard for us to pay the Municipal/Mayors permit which goes up almost every year.

    My plan is to close my business registration in the municipal where I located but not close the BIR because there are subscribers who ask for a receipt. Is it possible? What will I do. – Ernie

  22. gina lopez says

    Paano po kung itatransfer (dti and bir) sa pangalan ko ung dental clinic na nakapangalan sa mom ko tapos ako na rin ang mag babayad ng taxes? applicable po ba yun? ano po kaya ang procedure para dun?

  23. jenny says

    sir good day!
    just want to ask po i have a sari sari store nakaregister po sa bir since 2008 pa po, but came 2012 dna po ako nagbabayad ng tax dahil nga po ang liit nalang ng kita ngayon halos 1/4 nalang po siguro ng dati kong naging puhunan ang laman ng store ko. Gusto ko na po sanang ipasara yung registration sa bir. Paano po kaya? malaki po kaya ang babayaran ko? ang monthly payment ko po nun ay nasa 30-50 pesos lamang po..ayaw pa pong tanggapin ng bangko nuon, kaya nawawalan narin po ako ng ganang magbayad. please help..thanks..

  24. emma agregado says

    Good day. Our business is non operational for two years already we have paid our employees their due benefits. But until now, we haven’t formally process business closure with BIR and SEC. If we do not process business closures what would be th e owners’ obligation?
    Thank you.

  25. Nicholo Antonio says

    Hi Vic,

    Just came from the BIR-RDO to receive my certificate of closure. But I need a new TIN for my real estate sales commission. They would not let me apply for this, as they say that I should be cleared from the Main BIR office.

    Is this true?

    Hoping for your kind response.


  26. marita says

    hi Sir, i would like to ask where i can get the notice of closure/ cessation of business addressed to bir?
    hopping you reply my concern thanks…

  27. says

    Hello! Do you have any contacts who can help us close our business? We’re a corporation registered with SEC. Appreciate any leads! Thank you :)

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