Termination of business (liquidation) in Ukraine, Lviv

Termination of business (liquidation) in Ukraine, Lviv
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The author of the article collected a complete step-by-step guide on how to make the termination of business (liquidation) in Ukraine, Lviv. Two options are considered: “express method” with which tax inspection will be delayed for 3 years and a complete, safe method that guarantees the liquidation of a private entrepreneur by 100% without any claims from government agencies.

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With this service, you can order the following:

  • legal advice about liquidation of a private entrepreneur;
  • legal due diligence before termination;
  • opening LLC;
  • preparation of liquidation reports;

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*it’s also possible representation of colleagues from other countries:
+ consultancy before termination;
+ preparation of liquidation applications;
+ applying documents to state registrar;
+ applying documents for termination in a tax service;
+ full support in case of inspections.

If you are looking to other form of business to set up please, visit my other articles:

  1. Set up of LLC in Ukraine;
  2. Establish PE in Ukraine.

State registration of termination of a private entrepreneur

In order for the private entrepreneur to be suspended – it is necessary to enter information in the State Register of the termination of business (liquidation) as a private entrepreneur. This is the first and main step to implement the process of termination of a private entrepreneur.

Termination in CDAS

The easiest and cheapest way to enter the information in the registry – is to visit the Centre for the Delivery of Administrative Services (CDAS) and applying registration form No. 12. Some people believes that, besides this, nothing else is needed, but this statement is false.

Termination in the notary office

An alternative to visiting the CDAS is visiting a notary. However, it should be remembered that not every notary is involved in entering information into the Unified State Register of Legal Entities, a private entrepreneur, and public organizations. Also notary’s services are paid, unlike the CDAS.

Pay attention!

There are no government fees for termination of a private entrepreneur.

The liquidation in tax service, pension fund and statistic

Difficulties begins right here. After you applying form № 12 and the information for termination of business (liquidation) was entered in register – the registrar automatically sent an information about liquidation in tax service, pension fund and statistic. In connection with automatically notification, often in network we can see advices, that it is necessary to put documents in the CDAS and that’s all. In fact, further, at least – you need to apply a liquidation report to the tax service.

This report must be applying within 10 days from the moment of applying form № 12. It means that you need to be removed from the tax accounting, and also serves as a form of reporting for the last period of your activity. Together with the applying of the liquidation report, you must pay all tax liabilities for the last period of activity, of course, only if they have not yet been paid.

In statistics, your account will be closed automatically, as well as in the pension fund.

Practical advice!

In order to apply a liquidation report – you need to visit the tax service and provide it in paper form with the words “Liquidation”.

Termination of business (liquidation) in tax service

After automatic message of tax service about termination of a private entrepreneur begins to act art. 78.1.7. Tax code of Ukraine. It implies that after liquidation of the activity of the private entrepreneur in the tax service, an order for a documentary unscheduled inspection should be issued. This in turn means that the tax is sending you an email asking you to provide an exhaustive list of documents for verification, you provide it – it checks them – usually finds errors and, as a result, there are penalties.

Get legal service in Lviv

At this stage there is a significant delay in closing a private entrepreneur. This is due to the fact that the tax service does not usually rush to check. Not the last reason for this is that there is not enough staff. To speed it up – it is often recommended to write an application for a voluntary documentary check, thus accelerating taxpayers. As a result, you will pay off your obligations faster and completely close the private entrepreneur.

Lifehack!

Sometimes a voluntary tax check is useful.

Termination of a private entrepreneur without checking

The previous paragraph is frightening of fines. That is why there is a logical question: “Is it possible to avoid tax audit during liquidation?”. Purely Practical – Yes. But this is delayed for a long time. As I have already mentioned – tax authorities will not rush to make an inspection. The private entrepreneurs who want stop their activities – are many, but tax authorities – are few. That is why there is a theory that if you submit an application form No. 12 to the CDAS; submit a liquidation report; pay the existing tax liability – there will be no tax audit and the private entrepreneur will be closed.

Useful to know!

The term for filing claims for tax office is 3 years.

If after the termination of your private entrepreneur it has been passed 3 years and you have not received any message about checking – my congratulation! You closed the private entrepreneur without checking. In fact, in practice, such a termination takes place quite often. Many can do this. However, not everyone, the question will be open within 3 years after termination.

Suspension of a private entrepreneur

Suspension of activity – a mistake that is often admitted by private entrepreneurs, as a result of which they receive an arrears in the amount of 15-30 thousand UAH. This is explained by the fact that starting from 2017, each private entrepreneur, regardless of whether it suspended activity or active, is required to pay a minimal Social contribution which is 22% of the size of the minimal wage in the current period. The only way suspension of a sole trader is to submit a zero single tax report, a report on the Single Social Contribution, and to pay the Single Social Contribution on a monthly basis. However, this will not be free.

Messages from all counterparts

During the termination, it is advisable to inform the counterparties with which you are working on your liquidation. But there is no mandatory requirement for this – it will only be a good tone of business turnover.

Closing a bank account

To inform the bank about your closing is especially relevant for privare entrepreneurs having open bank accounts. Banks do not check the private entrepreneur’s activity and continue to charge a fee for servicing the account if the bank has not been notified of the liquidation of such a private entrepreneurs. As a result, a considerable amount of debt can be collected in front of the bank at some time. Whereas the sole trader is responsible for all his property as an individual, the bank can claim you as a person, not as a private entrepreneur.

Cancelation electronic signature

The electronic digital signature of a private entrepreneur and a natural person- is the same. That is why, you do not necessarily have to cancel your EDS in case of closing / termination the private entrepreneur.

Recommendations and Lifehacks for the liquidation of the private entrepreneur

Some argue that the closure / termination of a FOP without tax checking is impossible.It is not true. When you submit an application form No.12 – within 24 hours the state register submit an information about termination in the state register.

Often a private entrepreneurs are also attracted to the idea that they will close – after that they do not care about anything. This is also not the case, whereas an individual is liable for all his property for entrepreneurial activity in the form of a private entrepreneur.

Sometimes entrepreneurs are afraid to close because they believe that after that they will not be able to open a private entrepreneur again.This is not true information. You can register  the private entrepreneur as often as you like once a year, as well as stop your activity. The only remark is that you can become a single tax payer once a year.That is, if you closed the private entrepreneur on a single tax, then you can open a private entrepreneur, but you can choose a single tax only from next year.

Also actual Lifehack is that the tax service may require from you documents only during the last 3 years.So, if you think that you have some problem with the documents, you can not stop the private entrepreneur for 3 years,correct your original documentation and then safely close it without fear of checking.

Termination of business (liquidation) in Ukraine, Lviv
Bogdan Yankiv is a business lawyer. He is providing legal service for companies in Ukraine.

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