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How to close a company for economic reasons

November 22, 2019
How to close a company for economic reasons

The process to close a company depends on the characteristics that were adopted in its constitution. To determine how a company should be closed due to economic reasons, it must be taken into account whether it is a self-employed person or an individual entrepreneur, or on the contrary, it is a commercial company. That is why we explain in detail how to close a company for economic reasons.

How do you close a self-employed company for economic reasons?

The individual or autonomous entrepreneur has to follow different steps to be able to liquidate and, subsequently, close the company on which he bases his work.

These steps are:

  • Make a list of the debts you have contracted and pay them before the final closing of the company.
  • Make an inventory of the assets in your name and liquidate them.
  • If the self-employed person has dependents, he must fire them by paying the compensation corresponding to each of them. The individual entrepreneur can avoid paying compensation in case he does not have money and justifies it in the dismissal letter.
  • Unsubscribe as a freelancer (in the Social Security offices) and in the Industrial Registry (as definitive discharge).

How do you close a commercial company for economic reasons?

The regulations associated with mercantile companies stipulate that one of the causes of closure of a commercial company may be that the capital of the company is reduced so much that it is less than half of the capital stock with which it was founded.

If the closing is due to economic causes, the steps that the company must follow are the following:

  • Convocation of a General Meeting, in ordinary or extraordinary session, to discuss the cessation of business activity.
  • As soon as the agreement to dissolve the company is taken, an inventory must be made of the assets that the company has to carry out its subsequent liquidation.
  • It is important that the company pays all the debts that it has contracted, since, if not, the phase of creditors’ contest must be initiated , where the assets of the company will be liquidated for the payment of the debts and the responsibility will be determined that managers have about debts incurred.
  • When the company has liquidated all its assets and paid all its debts, it must notify the Mercantile Registry of the end of its business activity and the closing of the company.
  • Once the company has been liquidated, the end of the activity must be communicated to the Census of entrepreneurs of the tax agency. Each autonomous community has its own census.

It is necessary to raise the dissolution of the commercial company to a public document, which means that the intervention of a notary is required.

Special consideration: Compensation for dismissal

One of the most problematic points that should be dealt with in a company closure for economic reasons is the dismissal of workers who carry out their work within the company.

The compensation for this type of dismissal is 20 days of salary per year worked, establishing a limit of 12 monthly p