How to close a business in Australia

The word "closing" hides two very different processes, and which one you're in depends on your structure. A sole trader closes by finishing obligations and cancelling registrations, because legally the business is you: its debts are your personal debts and they don't go anywhere when the ABN does. A company is a separate legal person, so it has to be formally ended, and the right door depends entirely on whether it can pay what it owes.

Around 370,500 Australian businesses exited in 2024-25, against 437,150 new entries, on the Australian Bureau of Statistics' business counts. Closing is not failure at the margins of the economy. It is one of the most common things a business does, and doing it in the right order protects you personally.

The sequence matters because some steps are deadlined:

The hard part isn't paperwork, it's that closing doesn't touch the debts. They were always personal. If they're manageable, a payment plan with each creditor as part of an orderly wind-down is routine.

If they're not manageable, the formal option for an individual is bankruptcy or one of its alternatives. That decision deserves a conversation with a financial counsellor first, and the Small Business Debt Helpline on 1800 413 828 exists precisely for this. It's free.

Every company ending goes through one of three doors, and solvency picks the door:

If the company has no debts and almost nothing left in it, voluntary deregistration is the cheap, quiet exit. ASIC's conditions are strict but simple: all members agree, the company has stopped trading, its assets are worth less than $1,000, it has no outstanding liabilities (unpaid wages count), it's not in legal proceedings, and ASIC's own fees are paid up. Apply at least two weeks before your annual review fee falls due, or you'll owe that too.

If the company is solvent but holds more than $1,000 in assets, the exit is typically a members' voluntary liquidation. For a simple company, there's a cheaper path worth asking an accountant about: distribute the assets properly first, drop under the $1,000 threshold, and use the deregistration route.

Get the tax side square before either: the ATO expects lodgment and payment obligations up to date before a company deregisters, and a tax debt is a liability that disqualifies the ASIC route anyway.

If the company can't pay its debts as they fall due, the exits above are closed to you and the decision changes shape: it stops being administrative and becomes a director-duty question. Directors must not let an insolvent company keep trading, and the personal exposure for doing so is serious.

The orderly path is a creditors' voluntary liquidation: a registered liquidator takes over, you hand across the books and a report on the company's affairs, and you stop making the decisions. Fees vary with complexity, so get quotes from more than one registered liquidator before committing.

Liquidation is not the only response to insolvency. If the business might be worth saving, small business restructuring exists for exactly that, and if you're weighing the two, see the voluntary administration comparison. This page is about ending well, not rescuing.

Walking away doesn't work. Stop paying ASIC's annual fee and ASIC will eventually strike the company off itself, but nothing about that protects you: any remaining assets vest in ASIC (or in the Commonwealth, if the company held them on trust), director duties survive deregistration, and the ATO can still pursue director penalties for amounts that went unpaid before deregistration.

ASIC also holds a discretionary power to wind up abandoned companies so unpaid employees can reach the Fair Entitlements Guarantee, though it generally won't act where total entitlements owed are under $15,000. And a deregistered company can be reinstated, by ASIC on application or by court order sought by anyone adversely affected, creditors like the ATO included, precisely so its liabilities can be pursued.

Personal guarantees survive everything. If you guaranteed the lease, the supplier account or the loan, the company's end doesn't end your guarantee; the creditor simply comes to you. List your guarantees early, they're the map of your personal exposure.

And one to stay well clear of: moving the business's assets or customers into a fresh company for less than they're worth while the old one sinks with the debts is illegal phoenix activity, and ASIC's warning signs read like a how-to in reverse: same premises, same people, same bank account, new ACN. If an adviser proposes something that looks like this, that's the moment to get independent advice.

Closure triggers termination, and the National Employment Standards don't shrink because the business is ending. Minimum notice, or payment in lieu, is owed regardless of business size, scaled by service. Redundancy pay is owed on the standard scale if you have 15 or more employees; smaller employers are generally exempt from redundancy pay but never from notice, final wages and accrued leave. One exception cuts the other way: an employer that only became small by making people redundant on the way into liquidation or bankruptcy may still owe redundancy pay.

One fact changes how you should close if you can't pay your people: the Fair Entitlements Guarantee, the government scheme that covers employees' unpaid entitlements, only operates when the employer is in liquidation or bankruptcy. It does not apply to voluntary deregistration or abandonment. If you owe wages you can't pay, the closure route that lets your people be paid is liquidation, and that's worth weighing as heavily as any cost on this page. What your employees can claim, and how, is covered from their side in what happens to your pay when your employer goes under.

The Small Business Debt Helpline on 1800 413 828 is free, independent financial counselling for small business owners, by phone and live chat, run by a not-for-profit that helps you work through exactly these decisions, including whether bankruptcy or liquidation is actually necessary.

NewAccess for Small Business Owners, through Beyond Blue, is free mental-health coaching by people with small business backgrounds. No GP referral needed, for sole traders and businesses with 20 or fewer employees.

State small business commissioners offer free guidance, and low-cost mediation if the dispute is with a landlord or supplier. The mediation itself can carry a small fee; the advice doesn't.

If personal debts are tangled into it, the National Debt Helpline on 1800 007 007 covers that side, also free.

Start with a call before you pay anyone for advice. The free services above have no product to sell you, and the decisions on this page are easier with someone who makes them every day.