Do you want to close your Proprietorship Firm in India. In this guide we let you know How to Close Proprietorship Firm in India. Winding Up Proprietorship Firm is very difficult but if you follow this guide then definitely you can easily Close your Proprietorship Firm in just 7-10 days. In this article we will talks about the process of winding up of sole proprietorship firm in India so after reading this article you will get an idea about this. When you start a business you have to go through a process and when you close proprietorship Firm in India then also you have to go through a process. If you are thinking of winding up proprietorship firm in India then you have to follow the process of the closing so there will be no problem will arise in future.
How to Close Proprietorship Firm in India
So Now for the Close Sole Proprietorship Firm in India you have to follow below steps. Let you know that instead of the Closing even you can sell your Proprietorship Firm to another person for the same. So before starting the below steps let you know that we at MyOnlineCA also helps you to Close Proprietorship Firm in India. even you can register your new proprietorship firm for the same.
10 Steps on Closing Proprietorship Firm in India
- Before closing proprietorship firm in india you have to shut down your business, you have to inform your employees that you are going to shut down your business so that they can see other work for themselves. If you want to stop your business, you have to give notice to your employees before 60 days.
- It is very important to give prior notice to employees because as an employer it is your duty to inform about shut down to your employees so they can look another job, in case if you don’t give them prior notice of shutting down then you may be held liable under the laws.
- After giving notice, you will have to issue a final paycheck to your employees and have to complete other formalities to close your proprietorship firm in india.
- Before closing down the business, you have to inform your vendors and customers that you are shutting down your business in some time so that you can clear your financial account. During this time you can complete your remaining project and contracts.
- It is very important to inform your vendors and customers so you can clear your accounts with them and then you can settle your balance sheet. You have to make a termination agreement for closing proprietorship firm with your vendors, in which you will have to write the last day of your business and have to write that we close our business from that day then we will not be able to give our service after closing date of business. Termination agreement is important because it will avoid future implications regarding your proprietorship firm in india.
- One of the most important things you need to do is to cancel all business registration in india because when the business is closed, the license should be terminated so that no false allegation can be seen in the future. If you have a GST identification number then get it canceled so that no one can make false invoices of your business and your GST identification number can be used.
- To GST Registration Cancellation , you will have to go to the official website of GST and cancel it there and cancel it. even MyOnlineCA also deals in cancellation of the GST. You must also cancel other licenses like Shop Act License, to cancel it, you have to go to the municipality office or you can cancel it by visiting their website, it is necessary to cancel it because every year the municipality charges fee for this license, so for avoiding future license fee you should cancel it when you shut down your business.
- If you have got any other licenses by the name of your business, then you should terminate them immediately when you shut down your business, for that you have to go to the licensing department and give an application and they will cancel your license.
- If you have rented a place to do your business then get your rental agreement canceled so that you do not have to pay rent in the future and can also cancel the connections of electricity and water for avoiding future expenses. If you have any equipment and machinery which will not work later, you can also sell it and you have to retain the copies of those bills, and cancelation documents for tax purposes.
- You have to close your business’s current bank account and also cancel the checkbook and debit or credit card so that it cannot be misused. To get the bank account closed you will have to go to your bank and have to fill out a form and then have to submit that form then bank will shut down your account.
- In last, you have to comply with legal formalities of income tax department and GST department and have to pay your taxes. So remember this thing during closing of Proprietorship business.
Conclusion on Closing Proprietorship Firm in India
As you can see in the above given article that you can easily close proprietorship firm in India, as you can see that you have to cancel all your licenses and business registration so in future you will not be liable for your business and you should also terminate all agreement with vendors and with clients so in future you will not be liable for anything. If you are thinking of closing your sole proprietorship firm then you should follow the above given things for avoiding liability.