Closure Of MSME


Your business might be your kingdom, Not built in one day and same go while closing a proprietorship concern. There may be several reasons for the Closing of Proprietorship Firm. In India, more than 60% of Proprietorship firm not succeeded business due to adverse market situations. Understand the procedure to close your single owned will help you to close the Proprietorship Firm.


    Common reasons for the closure of sole proprietorship:

    Bankruptcy/Death of the Sole Proprietor: 

    Business can be put to an end on bankruptcy or death of the sole proprietor where it cannot be transferred to any other person or the business could not pay off its existing debts.

    Legal orders issued against business:

    Business shall have to be closed on receipt of legal orders from legal authorities if they are of the view that business is illegal or unethical.

    Failures or limited resources:

    For a sole proprietor, there is always a limited source for investment and finance. Holding business single-handedly, a proprietor has to manage his business with only a few sources he holds, failures in business due to limited resources can also lead to the closure of sole proprietorship.

    Voluntary dissolution:

    With challenges faced by a sole proprietor, he may opt to close down his business permanently or on the advisory of a legal expert stating for no future prospects the business to grow.

    The proprietor has taken up a job:-

     Generally proprietorship is started in a hush, generally, it is abandoned as soon as proprietor gets a more lucrative option. However seldom they forget to close it properly and hence invite department’s notices in the future.

    If the Proprietorship firm is registered under GST, it is advisable to surrender the registration before closing the Proprietorship Firm to avoid the compliance filing burden and additional fee or fines.


     If the Proprietor is registered under any other licenses in the name of the business, then it should be terminated immediately before shutting down the business to avoid renewals, other consequence and return filing formalities.


    You have to close your business’s current bank account and also return the unused cheque book, debit and credit card to the bank, so that it can not be misused. For bank account closure Proprietor will have to make the application to the banker and can obtain closure certificate. 


    Surrender of Trademark is known as “Withdrawal of Trademark.” If the Proprietor is willing to give up the rights of Trademark, Proprietor can submit the letter of Withdrawal to concerned Registry of Trademark to avoid renewal and other oppositions.


    If you have entered any agreement with any party or vendor during the course of business, it is always advisable to terminate those agreements to avoid future consequences and financial liability. For example, if Proprietor has rented a place for business, then the rental agreement must terminate so that you do not have to pay rent in the future.



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