How to end a trade business? Step by step procedure

Are you going to close your self-employed business and cancel your VAT number? Read our guide on how to cancel a trade licence. We'll advise you on what to look out for, what to do and which authorities to notify that you are quitting your business.

The difference between discontinuing and ending a trade

First, think about whether you really want to hang up your business. If you are a sole trader and you have decided to quit, there are two ways to do this, either to suspend or to close your business altogether. In either case, you don't have to tell the authorities the reason, it's just your personal decision.

Procedure for the termination of a trade

Are you sure you don't want to continue as self-employed? We will guide you through the process of cancelling your trade licence step by step:

1) Filling out the form on CRM

2) Reporting to the institutions

3) Claims
and taxes

4) Notice to employees

1) Complete and submit the change sheet to CRM

You don't need to give anyone a reason for closing your business, you just need to notify the trade licensing office of your decision first. The so-called change sheet, which is one version of the Unified Registration Form (JRF), is used to close a business - you know it well if you have changed your address, registered office or other details in the past.

There are several ways to complete and submit the change sheet :

• online via the Trade Business Portal after logging in using a data box or Citizen Identity (e.g. Bank Identity, eObčanka),
• download it in PDF format and send it by data box, by email with a recognised electronic signature or by post,
• in person directly at the Central Registration Point (CRM - Trade Licensing Office or Czech POINT branch).

The box for cancelling a trade can be found under 07. You can't backdate a trade, so enter the date you are completing the form, or any later date, in the date of cancellation box. If you do not fill in a date, the trade will be closed on the date the decision to close it becomes final.

If you have more than one trade licence and want to end them all, you must complete the cancellation form for each trade individually. You may find the instructions for completing the change sheet useful, as well as a template of what to write where.

After you submit the form, the trade office has 30 days to assess it. During this waiting period, you are still self-employed and an entrepreneur, i.e. you are obliged to pay social security and health insurance contributions.

2) Inform the tax office, the health insurance company and the social security administration

If you have not filled in the Central Registration Office's form to notify the institutions of the cancellation of your trade, you must inform the authorities individually within the following deadlines:

• Notify the health insurance authority within 8 days of the dissolution of the trade.
• Send the notification to the tax office by the 15th day after the dissolution of the trade.
• Submit the notification to the Social Insurance Institution by the 8th day of the month following the month in which the business was closed.

3) Don't forget about debts and taxes

Closing a self-employed business is not just a formality. Before you do, make sure you have your books or tax records straightened out.

Sort out any outstanding invoices, file missing receipts and complete everything that needs to be done. The same goes for inventory or fixed assets - keep track of what you have left in the business and what you've written off or sold.

Don't forget to file your tax returns and reports to the Social Security and Health Insurance companies on time in the coming year. This also applies to those who have taken up employment after the end of the business. Your employer will not file a tax return for you because it relates to income from when you were still in business.

As a self-employed person, you must file your return electronically by 2 May, or by 1 July if a tax adviser files it for you. In the same way, online, you send the Social Security Administration and your health insurance company a statement of your income and expenses from the last year of your business.

Don't know how to file a tax return when you close your business? We can help you! Contact us via the contact form for tax advice.

4) What to do with your employees when you stop being self-employed

Do you have employees and are terminating their employment due to the closure of your business? Then you are required to give your employees two months' notice and a severance payment of up to three times their average salary (depending on how long they have worked for you).

If the employees agree to this, then an alternative and quicker solution without notice is a termination agreement where you can mutually adjust the terms.

Cancellation and termination of a trade licence

Unless you specify a different date on your application, the trade will end on the date the trade authority's decision becomes final - the 16th day after the decision is delivered to you. From the moment you receive the decision, you have 15 days to appeal. Don't want to wait? You can waive your right to appeal when you receive the decision, thus speeding up the revocation.

The office can also cancel your trade without an application - for example, if you break the trade law, fail to meet the conditions for doing business or owe social security.

The registration number is not automatically cancelled

The identification number (ID number or IČO) you were assigned at the start of your business will not automatically disappear when you stop trading.

Want to make sure you don't have to file a zero tax return either? If so, you must apply to the tax office to cancel your income tax registration using the appropriate form. You must send the application within 15 days of the end of the business. The fastest way to file is through the online application EPO (Electronic Filing for Tax Administration).

However, after the termination of the trade, your data (including your VAT number) will remain publicly available for four years in registers such as Justice.cz, ARES or the Trade Business Portal. After that, they will be moved to their non-public part.

Don't know what to do? We can help you with the termination of your trade

If you are not sure how to proceed with the termination of a trade licence, or on the contrary, you are just thinking about setting up a trade, or you are looking for a registered office for a self-employed person, do not hesitate to contact us using the form below.

Contact information

Write to us and we’ll get back
to you within 24 hours.

+420 226 224 724

info@jake-james.cz

Revoluční 736/15, Praha 1

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