Why You Shouldn't Leave a "Dormant" IE: Risks and How to Close Entrepreneurial Activity
Many Ukrainians remain registered as individual entrepreneurs after ceasing actual work, without giving it much importance. However, the IE status does not automatically disappear along with the business closure. Until the entrepreneur officially registers the termination of activity, they may be subject to reporting obligations and other legal requirements. That is why experts advise not to postpone the IE closure procedure if there are no plans to continue entrepreneurial activity.
Why it is worth officially closing an IE
Often a person no longer conducts business but does not submit documents to terminate entrepreneurial activity. In this case, the IE formally continues to exist in state registers for years.
The main reasons for closing an IE include:
- no need to submit "zero" declarations, failure to submit which may lead to fines;
- cancellation of the obligation to pay contributions, including the single social contribution, single tax, and military levy, which may be charged regardless of actual business activity;
- avoiding risks of fines and penalties for so-called "dormant" IEs that do not submit reports.
How to terminate IE activity
Today, the procedure for terminating entrepreneurial activity is quite simple and takes minimal time. You can close an IE either through the "Diia" portal or by contacting a state registrar.
It is important that the termination of entrepreneurial activity is carried out regardless of the place of residence of the individual entrepreneur within Ukraine.
After receiving documents for state registration of activity termination, the state registrar is obliged to enter the relevant information into the Unified State Register within 24 hours. After that, the information is automatically transmitted to the State Tax Service, statistical authorities, and the Pension Fund.
How to close an IE through "Diia"
To terminate entrepreneurial activity through the "Diia" portal, you need to follow several steps:
- Obtain a qualified electronic signature (QES).
- Register or log in to your personal account on the "Diia" portal using the electronic signature.
- Fill out the online form to receive the service. Most of the necessary data is already in the system, so the user only needs to verify the correctness of the information and sign the application with the QES.
- Wait for the notification about the termination of entrepreneurial activity, which will appear in the personal account and be sent to the email.
As reminded by the Department of State Registration of the Executive Committee of the Kremenchuk City Council, if an entrepreneur no longer plans to conduct business activities, it is not worth leaving the FOP registered only formally. Timely termination of entrepreneurial activity helps avoid unnecessary reporting obligations, possible payment charges, fines, and penalties in the future.
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