CLOSURE OF SOLE PROPRIETORSHIP BUSINESS
In the Indian legislation, it is nowhere mandatory for a sole proprietor to initiate business only after obtaining a particular registration from any authority but certain procedural formalities do exist. Subjecting to the nature and the type of business activities performed, a sole proprietor has to only obtain a few licenses and undergo registration approvals under certain laws including the Shop and Establishment Act, Factories Act, GST Registration, etc. But rules regarding the closure of a sole proprietorship business are different. Before going into dissolution, it is essential for a proprietor to understand all obligations and liabilities of his entity and of himself as the sole proprietor to fulfil before the final closure of the business. If you are a sole proprietor and have taken a final decision of closing down your proprietorship business permanently, then follow the below guide to close it with all legal affirmations.
Why winding up of sole proprietorship is required?
Reasons for Closure of Sole Proprietorship
Legal closure of business in India is an essential step to be taken to avoid future complications and legal arbitrations, which otherwise can be faced if the business is closed without notifying government authorities.
Some common reasons for the closure of sole proprietorship business can be :
Steps for Legal Closure of Sole Proprietorship business.
The foremost thing for the closure of a sole proprietorship business is to apply for cancellation of all registrations which the business holds and the formation of a business closure agreement which is to be sent to all authorities and parties associated with the business. For necessary approvals and closure documents to be prepared, it is recommended to approach the state concerned authorities or take the help of a legal advisor.
Some common-licenses/registration to be canceled/surrendered:
Preparation of sale agreement and declarations from the parties buying assets is to be obtained to keep a legal record of all asset transactions. Then all assets are to be sold with clearing all payments from the buyers.
The final settlement agreement is to be formed with all employees, suppliers, lenders, and financial Institutions after making payment of their dues pending with the business or the proprietor, maintenance of such records is necessary so that they can be used in case any future obligation from any party arise.
To legally declare for the closure of sole proprietorship, it is necessary to go through the approval of the appropriate state concerned authority on a legal agreement ensuring business stands closed in the eyes of the government.
Service Inclusions
Professional Fees
Service Exclusions
GST, Government Fee, and other Additional Taxes
Process followed by White Code Legal:
Why White Code Legal?
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