One of the most significant issues faced by businesses in Dubai is company liquidation, yet company owners won’t discuss it until their firm is in danger of going bankrupt. This is why company liquidation in Dubai is a complex process, but it is considered the best strategy for almost all types of businesses. Business companies in Dubai recommend creating an exit strategy from the moment you design your business plan.
If exit feedback is not part of your business plan, you may be experiencing some negative consequences when trying to close your store in Dubai. Business owners who ignore this important business law can make many mistakes and unnecessarily delay setting up a company in Dubai. In this blog, we will guide you through some mistakes companies make in business so that you can avoid them if you encounter similar situations in the future by hiring professional liquidation audit firms in Dubai.
Company Liquidation is Dubai- A Quick Glance
Company liquidation in Dubai is a business bankruptcy in which the company (LL company, branch company, sole proprietorship company, free zone company) gives up all its business operations and distribution of company assets among creditors and shareholders. In simple words, liquidation of the company means dissolution of the company. If the company is unable to carry out its normal business activities, it may choose to be dissolved.
5 Common Mistakes To Avoid During the Company Liquidation In Dubai
Not Anticipating the liquidation
A true entrepreneur must be a visionary who can foresee the fate of the company they founded. Business owners should always be prepared for the worst-case scenario and make plans accordingly. A company may undergo liquidation in the UAE owing to myriad reasons such as debt, unfeasible operations, departure of the company founder, financial distress, loss of large contract or customer, company achieving its objective etc. The shareholders of the company must foresee any of these circumstances and plan for liquidation.
Ignoring The Voluntary Liquidation
A company’s directors or shareholders are responsible for making the best judgments at the appropriate times. Voluntary liquidation may be the only prudent course of action when a firm is going through a difficult period. For example, if you are a company under steep debts or financial distress, you should not wait to close it down if no other resolution is on the anvil. The creditors may approach a court to initiate the compulsory liquidation of your company.
To avoid being forced to do business by creditors, you can choose to become a voluntary company in Dubai. This way, you can eliminate the liabilities of all parties involved, including creditors and employees. You can also avoid reputation damage that may come through a compulsory liquidation initiated by a court.
Not applying for VAT deletion
You must resolve all important issues before applying for a voluntary business activity in the UAE. For example, if you are a VAT-registered organization in the process, you must apply for VAT deregistration. FTA must receive your cancellation request within 20 days of the cancellation policy being issued. If you fail to comply with these rules you will be fined AED 10,000. Not applying for VAT relief is a mistake companies make and causes delays when the company is successful.
Not winding up branches or subsidiaries
If you are a company with branches or offices, you should close them first. When the parent company closes, it is difficult for shareholders or managers to close a company or branch because the board of directors decides to eliminate a branch. Seek the advice of company liquidators in Dubai to meet this requirement effectively.
Disregarding Regulatory Compliance
In the UAE market, many businesses make the error of failing to abide by the law. Businesses that complement one another should determine if they must abide by the provisions of the Ultimate Beneficial Ownership (UBO) and the Economic Substances Regulation (ESR). Serious fines and reputational damage could arise from breaking ESR and UBO duties.
Liquidation Audit Services in Dubai
Whether you are walking away from a profitable business to utilize the profits ties up in the company or shutting down the company due to debts, expert advice is critical in helping you make the right decision for you and your company. Company liquidators in Dubai such as ebs Chartered Accountants can guide you through the entire process of winding up your company.
The process of company liquidation in Dubai involves a series of steps and requirements and we can make it simple and hassle-free for you. ebs has liquidated mainland, offshore and free zone.
Liquidate the right way through the Best Liquidators in Dubai
ebs chartered accountants is a reputable liquidation audit firm in Dubai , UAE. With our expertise in managing business processes in the UAE, our experts are ready to make your job easier. We provide business auditing services to keep your business running efficiently.
The business liquidation process in Dubai includes the steps and requirements and we make it easy and hassle-free for you with our audit & assurance services. ebs has subsidiaries across the UAE in mainland, offshore and free zones. Our highly skilled team of auditors in Dubai can complete the project smoothly and comply with current regulations. ebs s experience and learning curve will help you complete the process quickly.
ebs Chartered Accountants in Dubai also gives a wide range of offerings including company tax consultation and assistance with Corpoartetaxation Services and Usetaxgpt services for queries, making sure complete support for all your tax wishes. Their understanding can help navigate complex tax rules and optimize economic strategies for your commercial enterprise.
FAQS
What are the consequences of skipping a thorough review of financial records during a liquidation audit?
Skipping on a financial review can lead to inaccurate valuations, potential legal issues, and misallocation of assets.
Why is it crucial to involve all stakeholders in the liquidation audit process?
Involving all stakeholders ensures transparency, minimizes conflicts of interest, and promotes a fair distribution of assets.
What should be the approach when dealing with complex financial structures or assets during a liquidation audit?
Seek expert advice and conduct detailed analysis to accurately assess and account for complex financial structures or assets.
How does overlooking regulatory compliance and documentation requirements impact the outcome of a liquidation audit?
Overlooking compliance and documentation requirements can lead to fines, legal repercussions, delays in liquidation proceedings, and challenges in asset distribution.