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Winding Up

Definition - What does Winding Up mean?

This is the legal dissolution of a business partnership or corporation through proper legal requirement. This would include reconciliation of all accounts through collecting all income that is due to the company and paying all bills and creditors. A formal legal document is filed with the Companies Office or related government agency, and after that stage the company is legally able to close all supplier and creditor accounts. This means that the non-trading business will not be sued or held liable in the future for any outstanding payments to creditors or suppliers.

Justipedia explains Winding Up

The act of winding up a company can take time as there can be objections raised by creditors relating to the final payout figure or through suppliers for the same reasons. At times, legal action is taken to make a decision in a matter and allow the business to continue the act of legally shutting down the legal body that constitutes the business for tax purposes. Final accounts are drawn up, final tax payments are made, and then the company is legally able to "wind down", thereby making "winding down" the formal act of completing the task.

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