How to “close” an individual entrepreneur in 2020: step-by-step instructions

As practice shows, very often a situation arises when an entrepreneur “winds down” his business, but does not submit an application to the tax authority for deregistration as an individual entrepreneur, believing that in the absence of economic activity there is no requirement to pay taxes, contributions and submit reports. However, this is a misconception. Therefore, in some situations, deregistration as an individual entrepreneur is the most correct option. Let's consider this issue in more detail.

Choosing a method for closing an individual entrepreneur

There are two ways to close an IP:

1. Independent closure of an individual entrepreneur. A fairly simple procedure, which consists of preparing a number of documents and performing some preparatory procedures (paying taxes, fees, dismissing employees, etc.). In addition, by going through all the steps of closing an individual entrepreneur on your own, you will gain invaluable experience that may be useful to you more than once.
2. Paid closure of individual entrepreneurs through a specialized company. Suitable for those who want to save their time and do not want to delve into the process of closing an individual entrepreneur on their own.

How much does it cost to close a sole proprietorship?

Close the IP yourself

Close an individual entrepreneur for a fee through a specialized company

The cost of paid closure of an individual entrepreneur depends on the region, but usually ranges from 1,000 to 5,000 rubles.
The state fee for closing an individual entrepreneur, as a rule, is not included in this amount. Note

: the cost does not take into account the costs of taxes and fees, contributions, fines that may need to be paid, as well as the costs of settlements with employees (if any).

Comparison of independent and paid closure of individual entrepreneurs

We carry out preparatory actions

Before its closure, according to the law, an individual entrepreneur must fulfill only the first two points; he can fulfill the rest after cessation of activity. But, in practice, tax authorities often require that all the actions described below be performed at once.

Payment of taxes, fines and penalties to the Federal Tax Service

At this stage, you need to know exactly what amounts of taxes, fines and penalties you need to pay. Directly, the amount of taxes payable depends on the tax system on which the individual entrepreneur is located. You can obtain accurate information about existing debts and overpayments of taxes, fees and fines by reconciling settlements with the tax authority.

You can read more about individual entrepreneur taxes on this page.

Dismissal and full settlement with employees (if any)

In this case, the individual entrepreneur must by law:

• notify your employees in writing of the upcoming dismissal at least two months before closure;
• two weeks before closing, notify the Employment Service in writing;
• make full payments to employees;
• pay all necessary taxes and payments for employees;
• submit all required reporting for employees;
• after dismissal of all personnel, deregister with the Social Insurance Fund.

Paying insurance premiums “for yourself”

The exact amount of insurance premiums can be calculated if you know the closing date of the individual entrepreneur (to calculate, you can use this free online service on this website). Therefore, it is more convenient to pay for them after the termination of business activity (but no later than 15 calendar days from the date of making an entry in the Unified State Register of Individual Entrepreneurs). However, in practice, sometimes tax authorities illegally require payment before closing. In this case, the individual entrepreneur has four options:

• try to explain that these demands are unlawful and (or) demand a written request for payment of contributions and justification for the refusal to close the individual entrepreneur on this basis;
• send documents to close an individual entrepreneur by mail (in this case, the likelihood of refusal for this reason is minimal);
• still pay insurance premiums before closing the individual entrepreneur;
• file a complaint about unlawful actions (inaction) of tax authority officials to a higher authority (FTS).

Since 2011, the Federal Tax Service must independently request a certificate from the Pension Fund. However, if you still need a certificate for the debt, then you need to go with the documents to the Pension Fund of the Russian Federation and write an application to close the individual entrepreneur, then if, when calculating on the expected closing date, you get a debt, you should be given receipts, after which you can receive it.

Submission of all declarations, including those for an incomplete period

The exact deadline for submitting a tax return when closing an individual entrepreneur is not specified in the Tax Code of the Russian Federation, and therefore different Federal Tax Service Inspectors can interpret it in their own way: before closure, within 5 days after closure, or generally within the usual time frame. Therefore, an individual entrepreneur needs to clarify this issue with the Federal Tax Service at the place of registration.

Read about how to fill out a UTII liquidation declaration when closing an individual entrepreneur here.

Deregistration from the Social Insurance Fund

Only individual entrepreneurs who have employees are required to register with the Social Insurance Fund. However, some individual entrepreneurs independently register with the Social Insurance Fund (for example, those who are often sick, going on maternity leave, etc.).

From June 11, 2020, there is no need to notify the Social Insurance Fund of the termination of activities. Individual entrepreneurs will be deregistered with the Social Insurance Fund based on data sent to the tax office. At the same time, if an individual entrepreneur has debts to the Social Insurance Fund, this will not affect the withdrawal procedure in any way.

Closing an individual entrepreneur's current account

After receiving your last non-cash payments and paying all necessary taxes and insurance premiums, you should close your bank account. The balance can be withdrawn or transferred to any bank to another account, which can be specified when filling out the application.

From May 2, 2014, the obligation to notify about the closure (opening) of a current account in a bank has been abolished. Before May 2, the individual entrepreneur had to independently notify within 7 days: the tax service, the Pension Fund of Russia, the Social Insurance Fund (for individual entrepreneurs registered with it).

Deregistration of cash register equipment

In accordance with Law 54-FZ of March 22, 2003, companies and individual entrepreneurs are required to use cash register systems when making payments for goods, work or services. Individual entrepreneurs on OSNO and simplified tax systems were supposed to switch to new cash registers from 2017, but in the service sector a deferment was provided. Individual entrepreneurs on UTII and patent have been using cash register equipment since July 1, 2020. However, there is an exception - these are entrepreneurs who do not hire employees and are not engaged in retail trade. They can work without cash register until mid-2021, regardless of the tax system.

Note. It is prohibited to use old-style cash register equipment in 2020.

If you work at an online cash register, to deregister you will need:

1. Fill out an application for deregistration of the online cash register and, within one business day from the date of occurrence of the circumstances in connection with which deletion was required, send it to the Federal Tax Service (to any tax office in paper form, through the personal account of the cash register, or through the OFD). Additionally, you need to provide a report on the closure of the fiscal drive.
2. Receive a card about deregistration of the cash register. The deadline for generating a Federal Tax Service card is 5 working days from the date of application. After another 5 working days, you will be sent an up-to-date card through the CCP or OFD office (if desired, you can request a paper copy from the tax office).

Read more about how to deregister an online cash register in this article.

Dismissal of employees

An entrepreneur who has employees must fire them before liquidating the individual entrepreneur. The employment service must be notified of this at least 2 weeks before the termination of employment contracts. This notice can be drawn up in any form indicating the positions and specialties of the dismissed employees, as well as their working conditions.

After which an order is issued to dismiss workers, on the basis of which a corresponding entry is made in the work books.

At the end of the procedure for dismissing employees, the entrepreneur must prepare calculations for the Pension Fund and the Social Insurance Fund using forms RSV-1 and 4-FSS, as well as pay the resulting debt within 15 days from the date of submission of these forms.

After which the entrepreneur must send to the Pension Fund of the Russian Federation and the Social Insurance Fund of the Russian Federation an application for deregistration and copies of documents confirming the dismissal of employees.

The funds, in turn, must send the individual entrepreneur a notice of deregistration within 14 days from the date of acceptance of the documents.

We prepare the necessary documents for closing an individual entrepreneur

Application for closure of individual entrepreneur

An application in form P26001 is the main document required to terminate the activities of an individual entrepreneur (). Detailed instructions for filling out, as well as application samples relevant for 2020, can be found on this page.

Receipt for payment of state duty

In 2020, the state duty for closing an individual entrepreneur is 160 rubles

. You can generate a receipt and also pay for it online using this service on the official website of the Federal Tax Service (section State duty for registration of individual entrepreneurs). There you can print out a paper receipt and pay for it at any convenient Sberbank branch.

Learn more about paying state fees.

How to act as an individual entrepreneur without employees

Removing an entrepreneur from registration, or as they also say “closing an individual entrepreneur,” means excluding him from the unified register of entrepreneurs ( USRIP ). To initiate this exception, you need to come to the registration authority of the Federal Tax Service and submit form P26001. It must be accompanied by a receipt for payment of the state duty.

The tax authority is obliged to remove the entrepreneur from registration. The presence of debts on taxes or contributions does not matter.

Moreover, individual entrepreneurs usually “close” with a small debt in contributions. And it arises from the fact that it is impossible to determine the exact amount of contributions for the year at the time the entrepreneur is deregistered. After all, it depends on the number of days that the businessman was listed as an individual entrepreneur. And it is impossible to know in advance on what day the Federal Tax Service will deregister it.

The inspection must make an entry into the register regarding the termination of the activities of the individual entrepreneur no later than 5 days after submitting the form. You can see the result of registration actions through the tax service at egrul.nalog.ru. It is advisable to search using your TIN. The system will provide basic data: full name, OGRNIP, date of assignment and date of termination of activity. In addition, the now former individual entrepreneur will be given a sheet of entry indicating that he has been deregistered from the register.

The entrepreneur is no longer required to notify any authorities of his “closure”. The Federal Tax Service will transmit all information to the funds independently.

We submit documents to the tax office

The collected documents must be submitted to the tax authority that registered it (for example, in Moscow this is Federal Tax Service No. 46), and not to the one where it was registered (this does not apply to paying taxes and submitting reports). You can find out the address and contact information of your tax office using this service.

When independently submitting documents to the Federal Tax Service, an individual entrepreneur does not need to certify the signature on the application. However, when submitting documents through an authorized representative or sending documents by mail (necessarily with a declared value and an inventory of the contents), notarization is required.

When submitting documents remotely to the Federal Tax Service, you will need an electronic signature; read our article about which specific digital signature to choose for an individual entrepreneur.

How to deregister an individual entrepreneur with the tax authorities

The procedure for deregistering an individual entrepreneur with the tax office is divided into several stages.

The beginning is considered to be a visit by the entrepreneur to the Federal Tax Service, which is located in the area of ​​his registration as an individual entrepreneur. The businessman must provide a tax report upon closure of the enterprise. It is necessary to draw up a declaration for the last reporting period, which will be submitted to the tax office.

Note! If there are reasons why an individual entrepreneur could not previously submit reports on time, he will need to provide a declaration for all periods of his activity. Also, before submitting an application to the Federal Tax Service, he should create a report on “zero” declarations (the period when the business was not carried out).

While the application is being considered, an analytical reconciliation of the enterprise’s reports is carried out. Based on the results of the audit, debts are identified, penalties are calculated, and fines are imposed. The entrepreneur must make full repayment of all amounts accrued for payment.

After the closure of the IP

Please note that:

• an individual is not exempt from paying taxes, fines, insurance premiums and other debts incurred during his activities as an individual entrepreneur;
• if any of the actions described above to prepare for the closure of the IP have not been completed, then after closure they must be completed as quickly as possible;
• if there is an IP seal, its destruction is not necessary;
• if necessary, an individual entrepreneur can be opened again immediately after closure (for example, for a quick transition to another taxation system).

What you need to remember about terminating activities as an individual entrepreneur

1. Closing an individual entrepreneur is possible voluntarily (upon an application or claim for declaring the individual entrepreneur bankrupt) or forcibly.
2. The presence of debts (for wages, taxes, contributions, to other creditors) is not a basis for deregistering an individual entrepreneur.
3. The property liability of the former entrepreneur passes to his property as an individual (except for the list specified in Article 446 of the Code of Civil Procedure of the Russian Federation).
4. Before closing an individual entrepreneur, you must: fire employees; submit reports for employees; deregister from the funds; close the current account; deregister the cash register; reconcile settlements with the Federal Tax Service, funds and counterparties (recommended).
5. If you have significant debts, it is worth assessing the feasibility of initiating bankruptcy (for this you do not need to deregister as an individual entrepreneur).
6. You must store documents related to business activities for at least 4 years, and be prepared for the fact that the tax inspectorate may conduct an audit even after the termination of your individual entrepreneur status.