Termination of the business location of the LLC

Termination of the business location of the LLC is a necessary step when a business no longer needs to operate at that location, helping to minimize operating costs, accurately update legal information and avoid the risk of being fined for not providing timely notification. Following the correct procedures according to regulations will help the company maintain transparency and compliance in business operations.

When does the business location of a limited liability company cease to operate?

Business location is the place where an enterprise conducts specific business activities according to Clause 3, Article 44 of the Law on Enterprises 2020. Therefore, termination of business location operations occurs when the enterprise decides to close due to no longer effective profit-making activities or is decided by a competent state agency.

Specifically, according to Clause 1, Article 213 of the Law on Enterprise 2020, a business location will terminate operations in the following cases:

1. The business location of the enterprise is terminated according to the enterprise’s own decision:

• There is no longer a need for business at that location;
• As businesses adjust their operating models, some business locations may no longer be necessary;
• When facing financial problems, businesses need to optimize costs to maintain stable operations. One of the common measures is to close ineffective business locations to minimize financial burden;
• When an enterprise or managing branch terminates operations, all affiliated business locations must also carry out termination procedures.

2. The enterprise’s business location is terminated according to the decision to revoke the Business Location Registration Certificate of the competent state agency.

Thus, in cases where the company is compelled to make a decision, it must proceed with the termination of the business location of the LLC.

>>>See more: What is a business location? Registration process.

Procedures for the termination of the business location of the LLC

We would like to provide detailed information about the procedures for the termination of the business location of the LLC:

File

According to Clause 2, Article 72 of Decree No. 01/2021/ND-CP of the Government dated January 4, 2021 on business registration, the application for termination of business location must include the following documents:

• Notice of termination of business location operations according to the form Appendix II-20 issued with Circular 01/2021/TT-BKHDT of the Ministry of Planning and Investment;
• Resolution and decision of the company owner for the single-member limited liability company on termination of business location;
• Document authorizing the representative to carry out procedures for terminating the business location (if any);
• Legal documents of the party receiving authorization to carry out procedures for terminating the business location (copy).

You need to fully prepare the above documents so that the process of terminating operations can take place quickly and smoothly.

Implementation procedures

According to Article 72 of Decree 01/2021/ND-CP of the Government dated January 4, 2021, the process of terminating the business location of a limited liability company is carried out according to the following steps:

Step 1: Complete tax obligations

Before announcing the termination of business operations, the enterprise must register with the Tax Authority to fulfill its tax payment obligation according to the provisions of tax law. Businesses need:

• Declare and pay outstanding taxes;
• Receive confirmation from the tax authority on the completion of tax obligations;
• Make sure there are no tax debts at the business location.

Step 2: Submit notice of termination of operation

Within 10 days from the date of decision to terminate the operation of the business location, the enterprise must send documents to the Business Registration Office where the business location is located. Businesses can choose one of the following application submission methods:

• Submit directly to the Business Registration Office;
• Submit electronically (National information portal on business registration);
• Send documents via postal service.

Step 3: The Business Registration Office processes the documents

After receiving the application for termination of business location, the Business Registration Office will:

• Send information about the business location’s termination of operations to the Tax Authority;
• Within 02 working days from the date of receiving information from the Business Registration Office, the Tax Authority will send comments on the fulfillment of tax payment obligations of the business location to the Business Registration Office;
• The Business Registration Office updates enterprise information in the National Business Registration Database within 03 working days from the date of receipt of the notification.

It can be seen that the total processing time of the Business Registration Office is 05 working days from the date of receipt of the application for termination of business location.

Above is the entire process that you need to follow when terminating the operation of the business location of a one-member limited liability company.

>>> See more: Procedures for terminating the operation of an enterprise’s business location.

Important notes when terminating the business location of a limited liability company

It should be noted that when terminating a business location, in addition to issues of documents and implementation procedures, you need to pay attention to the following issues:

1. Carefully check your tax status before submitting your application:

According to the provisions of Article 72 of Decree 01/2021/ND-CP of the Government dated January 4, 2021, before announcing the termination of business location operations, enterprises must register with the Tax Authority to fulfill tax payment obligations according to the provisions of tax law.

2. Inform partners and customers to avoid affecting business reputation:

If the business location has regular transactions with customers, partners or suppliers, the business needs to have a clear plan to notify the termination of operations. This helps avoid misunderstandings and negative effects on brand reputation. Specifically as follows:

• Send official notification via email, text or direct notification;
• Instruct customers to convert transactions to other business locations (if any);
• Complete valid contracts to avoid disputes arising.

Early notification helps businesses maintain good relationships with customers and partners even when they stop operating at one location.

3. Complete obligations to personnel working at the business location:

According to the provisions of labor law, when terminating the operation of a business location, the enterprise must resolve the rights of employees. Specifically:

• Payment of salaries, allowances and benefits to personnel before closing the business location;
• Resolve the labor contract in accordance with the provisions of the Labor Code (can agree to terminate the contract or transfer personnel to another facility);
• Finalize and pay social insurance for employees if the business location participates in mandatory insurance.

Note: If the employee’s rights are not handled properly according to regulations, the enterprise may be subject to complaints and administrative sanctions.

4. Register to terminate operations on time to avoid administrative penalties

According to Clause 2, Article 72 of Decree 01/2021/ND-CP of the Government dated January 4, 2021, businesses must submit documents to terminate business location operations within 10 days from the date of decision to close.

If this deadline is exceeded, the enterprise may be subject to administrative sanctions according to the provisions of law in Clause 1, Article 54 of Decree No. 122/2021/ND-CP of the Government dated December 28, 2021.

Businesses should note:

• Make detailed time plans to ensure timely completion of procedures;
• Prepare complete documents to avoid having to supplement or prolong processing time;
• Monitor document processing progress to promptly resolve arising issues.

Thus, you need to pay attention to the above issues when carrying out procedures to terminate the business location of a limited liability company.

>>>See more: Things to note when contributing land use rights to a business.

Consulting services on procedures for the termination of the business location of the LLC at Long Phan Consulting Company

With many years of experience in the field of business consulting, Long Phan Consulting Company provides comprehensive support services for businesses during the process of terminating business locations. Our services include:

• In-depth consulting on the process of terminating business operations;
• Prepare complete documents according to legal regulations;
• Authorized representative of the enterprise working with the business registration agency;
• Monitor application processing progress;
• Consulting to resolve arising problems.

We are committed to providing professional, fast service and compliance with legal regulations, helping businesses save time, costs and avoid risks during the process of terminating business operations.

Some frequently asked questions about terminating a limited liability company’s business location

We would like to provide you with some common questions related to procedures for the termination of the business location of the LLC.  Please refer!

What should a company do with the assets of a closed place of business?

After ceasing operations at a place of business, a company needs to decide how to dispose of its assets. This may include transferring the assets to another place of business of the company, liquidating them or liquidating them in accordance with the company’s internal policies and relevant legal regulations on asset disposal.

How should a company handle existing business lease agreements?

The company must carefully review the business location rental agreement and comply with the provisions regarding early termination of the contract. This may include giving written notice to the landlord, negotiating exit terms, and fulfilling any financial obligations or penalties set forth in the lease.

What potential legal consequences could occur if the business location is not properly terminated?

Failure to comply with the legal procedures required to terminate a place of business may result in administrative penalties, such as fines. Additionally, it can cause complications with tax authorities, potential legal disputes with stakeholders, and negatively affect the company’s legal status.

Can a company reopen a previously closed business location?

Yes, a company has the ability to reopen a previously closed place of business. This will usually involve going through standard procedures for establishing a new place of business, including registering with the relevant authorities and obtaining the necessary licenses or permits.

How does closing a place of business affect the parent company’s operations and reporting?

Closing a business location may require adjustments to the parent company’s operating structure and internal reporting mechanisms and potentially affect the company’s tax obligations, depending on the importance of the closed location to the overall business. The parent company will need to update records and ensure accurate financial reporting reflects this change.

What is the overall estimated time to complete the business location closing process?

The entire process, from deciding to close until receiving confirmation of termination of operations, can take about 15-20 working days, including a 10-day application deadline after the decision is made, 2 days for tax authority review and 3 days for processing by the Business Registration Office. However, this time may vary depending on the performance of the relevant agencies and the completeness of the submitted documents.

Is a digital signature required when submitting an online termination application?

Yes, when submitting an online business registration termination application through the National Business Registration Portal, a valid digital signature of the company’s legal representative is often required to authenticate and ensure the legality of the electronic filing.

Is it necessary to translate or notarize documents for foreign-invested companies when closing their business locations?

For foreign-invested companies, some documents submitted to close a business location may require translation into Vietnamese and notarization or consular legalization, depending on the specific requirements of the local Business Registration Office and the origin of the documents. An attorney or registrar should be consulted to confirm these requirements.

What records should a company keep regarding business location closures and for how long?

The company should retain complete records related to the closure of the business location, including the decision to terminate operations, documents submitted, confirmations from the Business Registration Office and all communications with tax authorities. These records should be kept for the statutory period prescribed by Vietnamese law, typically several years, to comply with legal and tax regulations.

Above are some questions surrounding the procedure for terminating the business location of a limited liability company. We hope that the above answers have partly answered your questions about this issue and helped you feel more confident when performing this procedure. Thank you!

Conclude

The termination of the business location of the LLC is a legal process that requires strict compliance with the provisions of law. If you need in-depth support regarding procedures for terminating business operations, please contact Long Phan Consulting Company via the hotline 1900636389 to receive free advice and timely support from a team of experts.