An individual entrepreneur (IE) is a natural person, i.e. a person who has decided to engage in entrepreneurial activity on their own for profit.
If you decide to terminate your entrepreneurial activity, you need to file a corresponding application with the state registrar or submit an application for termination of entrepreneurial activity in electronic form, for example, through the citizen’s account on the Diia portal.
A sole proprietorship is deprived of the status of an entrepreneur from the date of making the relevant entry in the Unified State Register (USR).
The state registration of the closure of a sole proprietorship does not relieve you of your obligations arising from the conduct of business. In fact, the sole proprietorship is still registered with the State Tax Service (STS) as a taxpayer who received income from entrepreneurial activity.
What you need to do ?
To terminate a sole proprietorship, you must “zero out” and close all existing business accounts by submitting a corresponding application to the servicing bank.
By the way, the list of open accounts can be checked in the Payer’s Electronic Account, in the section “Payer’s Credentials” – “Bank Account Data”.
Also, generate a statement of cash flows for all accounts from the date of a possible tax audit to the date of the official closure of the sole proprietorship.
The very fact that the procedure for terminating the sole proprietorship has been initiated is a reason to conduct a documentary unscheduled tax audit of the taxpayer for at least the last three years. But keep in mind that in Ukraine, first due to quarantine, and later due to the introduction of martial law, the statute of limitations was temporarily suspended.
Submitting an application for termination of business activity and submitting liquidation reports does not mean that your sole proprietorship is completely closed. After the state registration of the termination of entrepreneurial activity, the individual continues to be registered with the regulatory authorities as a taxpayer who received income from entrepreneurial activity. And only a documentary audit will be the basis for deregistration of the sole proprietorship with the tax authorities and will mean the completion of the procedure for terminating the business activity.
However, not all sole proprietorships are subject to such an audit. The tax authorities exercise their right to conduct a documentary unscheduled audit if they deem it necessary. However, you can initiate an audit yourself if you still want to deregister from the tax authorities as soon as possible. To do this, you need to write a corresponding application to the State Tax Service. It is your right to undergo a documentary unscheduled audit.
First of all, this may be relevant for those who want to move to another country for permanent residence. In all other cases, there are no grounds to initiate an inspection on your own.
During the audit, you will need to provide the tax authorities with all documents related to your business activities. And even if you have closed your sole proprietorship, but do not plan to initiate deregistration yourself, be sure to keep the documents required for the audit.
Keep in mind that the period within which the tax authority decides to appoint a documentary unscheduled audit, in particular, in case of termination of the sole proprietorship, is not defined by the Tax Code of Ukraine (TCU). Therefore, you should always be prepared for this.
How to deregister a sole proprietorship with the tax authorities after termination of business activity ?
You must:
– Submit statutory liquidation reports – for “simplified taxpayers” this is a single tax payer’s declaration and a report on unified social tax
– Make final settlements with the budget by paying the necessary taxes and fees – obligations stipulated by the last reporting period and those that arose earlier but were not repaid on time.
– If the sole proprietor submitted Form 20-OPP, it must also be canceled by submitting a Report on Form 20-OPP with information on the closure of the taxable object(s).
– If the sole proprietor has a registered cash register (payment transaction recorder), this device must also be deregistered.
How to get a service in Diia ?
- Click Submit application, log in or register in the citizen’s account.
- All the necessary information will be pulled into the application from the USR. Check if it is correct and sign the application with an electronic signature of an individual.
- The application will be sent to the Unified State Register to terminate the sole proprietorship online without the participation of the registrar. Information about the closure will also be sent to the tax service.
- The status of the application can be checked in the citizen’s account in the Services – Ordered services section. A notification about the closure of the sole proprietorship will appear in the Attention section and will be sent by e-mail.
As a result, information about the closure of the sole proprietorship will automatically be submitted to the USR and the tax office at the place of registration of the sole proprietorship. If you have been operating under the simplified taxation system, you will be excluded from the register of single tax payers and the register of value added tax (VAT) payers. From that moment on, your sole proprietorship is considered closed.
What if I don’t have an electronic signature ?
To obtain an electronic signature, contact any accredited key certification center. Fill out the registration form and enter your passport details and taxpayer number. The cost of the service starts from 200 UAH, but may vary from one key certification center to another.
An electronic signature can also be obtained:
– in Privat Bank, the bank’s customers can get a QES (qualified electronic signature) free of charge in their personal online account Privat24 or by contacting the branch;
– in Oschadbank’s online chatbot, the service is free of charge for bank customers;
– at the Ministry of Internal Affairs and the State Tax Service – free of charge.
It is advisable to store the electronic signature key on a removable secure medium (e.g., a flash drive). Such devices and requirements for this type of key exist for notaries and lawyers.
Can I close my sole proprietorship if I am abroad ?
Yes, you can apply for the closure of a sole proprietorship online without having to visit an administrative service center (ASC) or tax office. In this case, the system will automatically make an entry in the Unified State Register and inform the tax office where the sole proprietorship was registered about the closure.
However, if you have licenses, they should be revoked in person or through an intermediary if they have a notarized power of attorney on your behalf to carry out such procedures.
Closing a individual entrepreneur is a process that requires a careful and responsible approach. Although the procedure may seem complicated and confusing, proper adherence to all stages guarantees the successful completion of business activities without any problems.
To avoid difficulties and mistakes during the closure of a sole proprietorship, please contact our law firm. Our experienced specialists will help you go through all the stages of the procedure quickly and without unnecessary worries. We guarantee a professional approach, timely execution of all necessary actions and an individual approach to each client.
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