CLOSURE OF SOLE PROPRIETORSHIP CONCERN

Do you wish to close your business completely, go with the legal procedure to avoid future disputes.

APPLY NOW FOR CLOSURE OF YOUR SOLE PROPRIETORSHIP CONCERN

OVERVIEW OF CLOSURE OF SOLE PROPRIETORSHIP CONCERN

A Sole Proprietorship Concern refers to a unique type of Business Entity which is owned by an Individual. Sole Proprietorship Concerns are known for the simple incorporation process and lowest regulatory compliance requirement.
Proprietorship concern is the easiest form of business for individual as it is not governed by any statute.
Thus for closure of business also there is no specific process governed by any act.
But for the closure of the sole proprietorship concern, owner yet required to settle accounts and outstanding credit generated by the business and must cancel the licenses like –

Trade license
Shop Establishment certificate
GST Registration
Other Business Registrations

DOCUMENTS REQUIRED FOR CLOSURE OF SOLE PROPRIETORSHIP FIRM

Statement of Accounts

Detailed account statement of the Sole proprietorship concern.

Bank Details

Copy of bank current Account Statement /Certificate.

Proprietor Details

Pan card & Aadhar card.

Registration Certificate

Details & Registration Certificate of Sole proprietorship, if any taken.

IMPORTANT POINTS ONE MUST REMEMBER BEFORE CLOSING DOWN OF SOLE PROPRIETORSHIP CONCERN

Inform his employees about closure of his business so that they can search work for themselves.
Inform vendor and customers of business about closure so that they can settle their accounts.
Terminate all agreement with vendors and with clients entered by the business and this will maintain goodwill and reputation of sole proprietor in the market.
Close current account with bank and terminate all other banking facilities availing in the name of business so it cannot be misused in future.
Pay all statutory dues of the business.
Pay off all the liabilities of the business.
Make an application to the concerned authority for the purpose of cancellation of shop and establishment license so that no false allegations can be filed in future.

WHY TO DO LEGAL CLOSURE OF SOLE PROPRIETORSHIP CONCERN REQUIRED?

No non-compliance risk – Legal shut down of business avoid the dispute which might arise in future.
No risk of high penalties – Penalties occurring due to any default will not get increased due to official closure. However liability till date of closure need to be paid off.
No Yearly compliance cost to be paid – Closure of firm in proper manner will end the requirement of payment of various cost which might arise due to non-intimation of closure.
No risk of getting into default – Even after stopping the running of operation, risk of default may arise due to unawareness of closure. Legal closure will help in avoiding such defaulting liabilities.

Frequently ASKED Questions

What is sole proprietorship concern?

A sole proprietorship concern is setup by an individual. When an owner begins operating his business with opening of current account on his own name or in the name of proprietorship firm.

Does the closure of sole proprietorship concern is governed by proper procedure under any Act?

Proprietorship concern is the easiest form of business for individual as it is not governed by any statute. Thus for closure of business also there is no specific process governed by any act.

Who can start sole proprietorship concern?

Any Indian citizen who has attained 18 years of his age may start an sole proprietorship concern.

What are the annual compliances requirement of the sole proprietorship concern?

Sole proprietor is required to file annual tax return with the income tax department only.

Who shall be liable for the loss in the business?

Liability of the Sole proprietor is unlimited. He himself shall be personally liable for the payment of all the losses so incurred.

Can a sole proprietorship concern remain in existence even after death of the proprietor?

No, sole proprietorship concern does not have perpetual existence and thus the existence of the concern shall comes to an end after the death of the proprietor.

Can I transfer my sole proprietorship concern to other person?

Sole proprietorship concern cannot be transferred like company or LLP, transfer of assets and liability can take place but business registration and other registrations being in the name of sole proprietor cannot be transferred.

Does like other business forms, sole proprietorship concern is also required to disclose its financial reports to the public?

No, sole proprietorship concern does not have any obligation to disclose its financial reports to the public like other business forms.

What is required to be done if the sole proprietor has obtained GST identification number?

If the Sole proprietor has obtained GST identification number than he is required to surrender his GST it can be done through the official website of the GST.

When a sole proprietorship business legally be dissolved?

There are three events that can cause the dissolution of a sole proprietorship:

At the owner’s decision,
Insanity of sole member
In case of death or disability of the owner
In case of bankruptcy- which may comprise of the owner’s assets as well as of the business. These are the various effects caused on how the business operation ceases .

Does the applicant required to present physically for the process of closure of the business?

No, the applicant is not required to present physically for the process of closure of the business. LegalDisha.com provides you online services and assistance for the same.