How to close a sole proprietorship

This article will be useful for entrepreneurs who have decided to stop their business for any reason.

Just a couple of years ago, in order to close a sole proprietorship, you had to go through seven circles of hell and visit a bunch of government agencies. Today, the procedure has become easier. Read our article to find out what it looks like in practice.

Checking the sole proprietorship in the Unified State Register of Legal Entities and Individuals (USR)

The Law on State Registration, Article 4, Section 8, states that a sole proprietorship is deprived of its status as an entrepreneur from the date of making the entry "terminated" in the Unified State Register.

In order to receive the "terminated" mark, you must first check that your data specified in the Unified State Register corresponds to the actual data. What does this mean? To begin with, open your passport and check your residence with the address of your sole proprietorship registration. If they match - great, if they don't - we make changes to the register and only then go to submit documents for closure.

Why do you need to check your passport registration with the address in the registry? Formally speaking, if your data is different, then you are two different people for the state.

If you were registered as an entrepreneur before July 1, 2004, then most likely there will be no information about you in the Unified State Register. In this case, you must first enter your information as a sole proprietor in the register (submit Form 13), and then apply for the cancellation of your business.

Entering information on termination into the Unified State Register

To terminate your business, you need to contact the state registrar at the ASC or a notary.

The documents for closure can be submitted in person, by mail or electronically through the website of the Ministry of Justice or through the Diia website.

Please note! If you decide to close a sole proprietorship through the Diia website, you will still have to visit the tax office at the place of registration and visit the bank where you have an account. Using the online service, you can only submit an application for closure and removal of information from the register.

If you decide to close a sole proprietorship through a notary, keep in mind that their services are paid (the state registrars are free) and not all notaries are involved in deregistration.

Documents for registration of a sole proprietorship:

1. Application for state termination of entrepreneurial activity of an individual entrepreneur by his/her decision (Form 12).

2. Original passport (if you submit documents yourself).

3. A notarized copy of the power of attorney (if someone submits the documents for you).

After accepting the documents, the state registrar will issue you a notice of entry into the Unified State Register of Entrepreneurial Activities.

Submission of liquidation reports.

After entering the data on the termination of activities into the Unified State Register, you will need to submit liquidation reports to the tax authorities. It will have to be submitted in the old-fashioned way: in person or by mail, as the agreement on the recognition of reports with the State Tax Service will be terminated automatically.

Individual entrepreneurs on the general taxation system

The liquidation declaration of property status and income is submitted for the last period within 30 calendar days from the date of registration in the Unified State Register. For example, if you close your business on March 5, the declaration must be submitted by March 31.

The last reporting period is from January 1 of the current year to the last day of the calendar month in which you cease operations. In our example, from January 1, 2020 to March 31, 2020.

Only income from entrepreneurial activity should be shown in the declaration.

Type of declaration "Reporting"

Individual entrepreneur on a single tax

The Tax Code of Ukraine does not provide for any special procedures for filing liquidation reports for sole proprietors on the single tax. That is, the reporting deadlines for you remain the same (for groups 1, 2 and 3).

If you cease your activities, for example, in March, you can report within 40 calendar days after the end of the tax quarter. In our example, the deadline for submitting liquidation reports is May 10.

The last reporting period for Groups 1 and 2 is the period of being on the single tax in the reporting year. For Group 3, it is the quarter in which the deregistration in the Unified State Register was carried out.

Type of declaration "Reporting"

Single social contribution

You need to report on the unified social tax for yourself within 30 calendar days from the date of making the entry in the Unified State Register by submitting a report in the form No. D5. If you close your business, for example, in March, then the report must be submitted in March.

The last reporting period is from January 1 of the current year to the date of deregistration in the Unified State Register. In our example, this is from 01.01.2020 to 31.03.2020.

The type of form is "Liquidation".

And most importantly! Do not forget to pay all tax liabilities for the last reporting period. The unified social contribution must be paid for the full month in which the activity was terminated!

Bank and EDS

To close your bank accounts, you need to contact your bank on your own. To do this, it is advisable to find out in advance what documents you will need, as each bank may have different rules.

Before you go to the tax office, ask your bank manager to prepare a bank statement for you for the last three years, as you may still need it.

If you have an electronic digital signature, you do not need to revoke it. First, it will stop working after the key certificate expires. Secondly, you may need it as an individual.

Deregistration with the tax authorities

An individual entrepreneur is registered with the tax authorities as a taxpayer:

1. Taxes and duties.

2. Single social contribution.

In addition, after you are deregistered as a sole proprietor, you will still be registered with the tax authorities as an individual.

1. Payer of taxes and fees

You are deregistered from the tax register as a taxpayer on the basis of an entry in the Unified State Register. The date of deregistration will be the same as the date of entry in the USR.

Sometimes, the tax authorities may require you to submit an application for termination of the simplified taxation system.

From the unpleasant: in some cases, the State Tax Service may appoint an audit (last 1095 days from the date of termination of activity).

2. SINGLE SOCIAL CONTRIBUTION

You will be deregistered as a single social contribution payer only after the audit. There are no restrictions on the audit period. There are also no time limits for the audit.

If you need to close earlier, you can submit an application to the tax office with a request for an unscheduled documentary audit.

Keep in mind that after a sole proprietorship is deregistered, the tax authorities do not issue any documents.

You can check your status yourself on the USR website or through the taxpayer's electronic cabinet.

Please note! Distribution of the Torgsoft software product is prohibited by way of gift, sale, rental, lease or loan. Therefore, if you decide to cease your business activity, you may not sell, give away or return the Torgsoft product accounting program.