How to stop doing business on a trade license

If you are planning to stop doing business on a trade license, it is good to know what you need to arrange and what authorities need to be informed about the revocation of the trade. Below we provide a simple guide on how to revoke a trade license.

SUSPENSION VS. REVOCATION

If you are a self-employed person and have decided to end this type of business, there are basically two ways to do so. In the first case, you can merely suspend the trade license; in the second case, you can revoke your trade license completely. In contrast to the mere suspension of a trade license, revocation is final. You can suspend your trade license for any length of time, so there is nothing to stop you from returning to it in a few years and continuing your business after the trade license has resumed. However, if you revoke the trade license and decide to do business again in the future, you will have to establish the trade license again, which in addition to official hassle this will cost you a fee for creating a new trade license.

HOW TO REVOKE A TRADE LICENSE

If you decide to end your work as a self-employed person, here are a few steps you must take to successfully revoke a trade license.

1.INFORM THE TRADE LICENSING OFFICE

To be able to revoke a trade license at all, the revocation must be approved by the Trade Licensing Office. Therefore, before revoking a trade, it is important to go to the relevant Trade Licensing Office and fill in the application for revocation of the trade license. After completing the application, the Trade Licensing Office has 30 days to comply with your application. During this waiting period, you are still a self-employed person and therefore also a business.

After the decision of the Trade Licensing Office and receipt of the approved application, you must provide the Trade Licensing Office with the tax administrator's consent to dissolve the business. For this consent to be issued you must submit a tax return for the year in which you terminate your trade license by the statutory deadlines. These terms vary depending on whether you have a tax advisor. If you do not have a tax advisor, you must submit a tax return by the end of March; if you have a tax advisor, the deadline for submitting a tax return is by the end of June.

2. CLOSE YOUR COMPANY ACCOUNTS AND SETTLE ALL RECEIVABLES

If you are planning to revoke your trade license and you still have some outstanding receivables and accounting gaps, don't forget to settle everything first. The same applies to inventories or fixed assets. You are required to keep accounts until the last day of your business, and at the end of that day, make the financial statements to close the accounts. If you have any employees and you terminate them due to the revocation of your trade license, you are obliged to provide employees with a two-month notice period and severance pay in the amount of three times the average salary.

3.INFORM THE TAX ADMINISTRATOR, TAX OFFICE AND HEALTH INSURANCE COMPANY

You are obliged to inform your health insurance company no later than eight days after the termination of the trade license. It is then necessary to inform the tax office by the fifteenth day after the revocation of the trade license and the social security administration by the eighth day of the following calendar month. Here it is necessary to provide reports on your income and expenses for the given billing period.

EXPIRY OF TRADE LICENSE

If no other date has been specified in the application for revocation of a trade license, the trade license will expire on the day when the decision on revocation of the trade license issued by the Trade Licensing Office takes legal effect.

The decision on the revocation of a trade license takes legal effect on the sixteenth day after the issuance of the decision to the applicant. Within fifteen days from the date of notification of the decision to terminate the trade license, you can file an appeal against the decision of the Trade Licensing Office. If you do not want to wait that long, you can waive your right to appeal when taking over the decision. However, it is necessary to remember that the trade license does not have to be revoked only at the initiative of its holder. The trade license may also be terminated by the Trade Licensing Office itself if you violate the Trade Licensing Act, or by the Czech Social Security Administration if you have, for example, arrears on social insurance as a self-employed person.

NEED HELP?

If you are still not sure how to proceed with the revocation of a trade license, or on the contrary are considering the establishment of a trade license or are looking for a seat for a self-employed person, do not hesitate to contact us. We will be happy to help you with everything.