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TAXAJ Corporate Services LLP - Financial Doctors

Close Proprietorship Firm | Proprietorship Firm Closure

There may be several reasons for the Closing of Proprietorship Firm. In India, more than 60% of Proprietorship firm not succeeded business due to adverse market situations. Our dedicated team will help you with all the documentation. We extend our support from documentation to preparation and filing.

There is no law which requires a proprietorship to be registered like company and LLP. Sole proprietors do not have to consult with anyone else before deciding to call it quits. The Proprietorship firm can be easily closed by cancelling all your licenses and business registration so that in future, Proprietor is not liable to file any returns and compliance. Before closing the firm, Proprietor needs to terminate all agreement with vendors and clients to avoid any future consequences and liability. If you are thinking about closing your sole proprietorship firm, our dedicated team will help you.

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About This Plan

Did not commence your business or no business at all now ? Get your Proprietorship Firm closed and avoid any legal hassles.

Created by potrace 1.15, written by Peter Selinger 2001-2017

Timeline

It usually takes 7 to 10 working days.

Buy Now
Services Covered
Who Should Buy
How It's Done
Documents Required
Services Covered

  • Closure of Proprietorship Firm
  • Surrender of TAN
  • Surrender of GST
  • Surrender any other Licenses
Who Should Buy

  • Firm with no operations
  • Firm without any third party transactions
  • Firm with no employees
  • Firm with no registration under GST, VAT and other tax departments
How It's Done
  • Purchase of Plan
  • Expert Assigned
  • Preparation of name removal Documents
  • Filing with Department
Documents Required

  • Name, Contact Number and Email Id

  • Self Attested PAN, Aadhar & Passport size photo

  • NOC from commercial departments

  • Letter of account closure from bank

  • Previous Year's Audited Financials & Tax Reports

Closure of Proprietorship Firm Explained here in this video!

Common Reasons for Closure of Proprietorship Firm

Legal closure of business in India is an essential step to be taken to avoid future complications and legal arbitrations, which otherwise be faced if the business is closed without notifying government authorities.

Some common reasons for the closure of sole proprietorship business can be :

Bankruptcy/Death of the Sole Proprietor:  Business can be put to an end on bankruptcy or death of the sole proprietor where it cannot be transferred to any other person or the business could not pay off its existing debts.

Legal orders issued against business: Business shall have to be closed on receipt of legal orders from legal authorities if they are of the view that business is illegal or unethical.

Failures or limited resources: For a sole proprietor, there is always a limited source for investment and finance. Holding business single-handedly, a proprietor has to manage his business with only a few sources he holds, failures in business due to limited resources can also lead to the closure of sole proprietorship.

Voluntary dissolution: With challenges faced by a sole proprietor, he may opt to close down his business permanently or on the advisory of a legal expert stating for no future prospects the business to grow.

Steps to Close the Proprietorship Firm

Cancel GST Registration

If the Proprietorship firm is registered under GST, it is advisable to surrender the registration before closing the Proprietorship Firm to avoid the compliance filing burden and additional fee or fines.

Surrender other Licenses

 If the Proprietor is registered under any other licenses in the name of the business, then it should be terminated immediately before shutting down the business to avoid renewals, other consequence and return filing formalities.

Cancellation of Shop & Estb Reg

Since Shop & Establishment Registration is granted by Labour Department of the State and in many states Shop & Establishment Registration needs to renew every year with a specified Fee. You must cancel the Shop & Establishment Registration before closing the Proprietorship firm to avoid renewal fee & non-compliance.

Surrender Trade License

Since Trade License is granted by the local municipal corporation and needs to renew every year on or before 31st March with a fixed renewal fees. In case the Proprietor is about to shut down the business, it is always advisable to move the request to the concern municipal corporation for cancel of the registration.

Surrender TAN Number

The PAN of the Proprietor and Proprietorship firm is the same. Hence, there is no requirement of informing the Income Tax Department regarding the closure of proprietorship business. However, the Allocated TAN number is no more required by the Proprietor. The Proprietor is required to make an application to the jurisdictional AO for cancellation.

Termination of Agreements

If you have entered any agreement with any party or vendor during the course of business, it is always advisable to terminate those agreements to avoid future consequences and financial liability. For example, if Proprietor has rented a place for business, then the rental agreement must terminate so that you do not have to pay rent in the future.

Closure of Bank Account

You have to close your business’s current bank account and also return the unused cheque book, debit and credit card to the bank, so that it can not be misused. For bank account closure Proprietor will have to make the application to the banker and can obtain closure certificate. 

Surrender Trademark

Surrender of Trademark is known as “Withdrawal of Trademark.” If the Proprietor is willing to give up the rights of Trademark, Proprietor can submit the letter of Withdrawal to concerned Registry of Trademark to avoid renewal and other oppositions.

Inform your Stakeholders

You must inform your stakeholders about the closure of your proprietorship firm either via call, message or email so that they can be aware of the same and someone else may not use your company's name for any mishappening.

Why Close/Wind Up Sole Proprietorship Legally?

  • Legal Protection: if your proprietorship is closed on a positive note but without the approval of the appropriate State, central or concerned authorities, the business shall be under the obligation for compliances or liabilities which can arise in the future. Thus, receiving government approval and approval from concerned authorities eliminates business responsibilities from legal suits against business or proprietor.
  • Easy Final Settlement: Going for dissolution of sole proprietorship through legal agreements with all creditors employees and parties associated with a business will help in better settlement of business obligations.
  • Eliminate unforeseen liabilities: With the receipt of the certificate from a state or concerned authority for closure of business, the business will no more be called for any future liability.