Termination of the activity of an individual entrepreneur does not mean the automatic termination of tax obligations. After state registration of the closure, the entrepreneur must complete a number of mandatory procedures. The algorithm for submitting liquidation reports and final calculations is presented below.
Closing a sole proprietorship
Termination of entrepreneurial activity of an individual entrepreneur is traditionally perceived as the final stage of doing business. However, from a practical and tax point of view, this is only the beginning of a separate set of procedures related to the fulfillment of final obligations to the state. It is at this stage that the entrepreneur's final tax position is formed, and any inaccuracies or ignoring the requirements of the law can lead to financial risks.
Quite often, after making an entry in the Unified State Register, entrepreneurs mistakenly consider their obligations to be completed. However, current tax legislation clearly regulates the procedure for submitting liquidation reports, the deadlines for final settlements, and the possibility of inspections by regulatory authorities.
Procedure for submitting the latest report
After making an entry in the Unified State Register of termination of entrepreneurial activity, an individual is not exempt from fulfilling tax obligations. The law establishes a clear procedure for submitting the final reporting and making final settlements with the budget. Errors at this stage may lead to additional charges, fines or inspections.
The Tax Code norm provides for different deadlines for liquidation reporting depending on the taxation system.
An individual entrepreneur on the general system submits a declaration of property status and income within 20 calendar days after the end of the month of termination (item 177.11 of the Tax Code of Ukraine). For single tax payers, the last report is submitted within 40 calendar days after the end of the quarter in which the termination occurred (item 294.6 of the Tax Code of Ukraine). In each case, a note on liquidation is necessarily indicated in the declaration.
In practice, this means that tax liabilities do not automatically cease with state registration. Personal income tax and military duty are paid within 10 calendar days after the deadline for submitting the declaration in accordance with the rules of Section IV of the Tax Code of Ukraine. It is necessary to separately submit information on the accrued single contribution as part of the liquidation reporting and pay it within the terms specified in Article 9 of the Law of Ukraine No. 2464-VI.
It is important to consider that the termination of entrepreneurial activity is a basis for conducting an unscheduled documentary audit (item 78.1.7 of the Tax Code of Ukraine). In addition, an individual continues to be liable for tax debts that arose during the activity.
Primary documents must be retained for at least 1825 days after termination in accordance with item 44.3 of the Tax Code.
Therefore, it is important to remember that state registration of the termination of an individual entrepreneur does not complete tax procedures - correct submission of liquidation reports and timely settlements with the budget are the key conditions for terminating entrepreneurial activity without financial consequences.
