Closing a business: how to shut down a proprietorship, LLP or company

Before you close (all entities)

1. Collect receivables and pay creditors, including employees, taxes and statutory dues.
2. Sell or transfer remaining stock and assets, or decide who keeps them.
3. File every pending return: GST, TDS, income tax and, for companies and LLPs, MCA forms.
4. Settle employees: final wages, leave encashment, gratuity, and PF/ESI closure.

GST

1. Apply for cancellation in REG-16 on the GST portal.
2. On cancellation, you must pay back ITC on stock, inputs in semi-finished or finished goods, and capital goods held on that date (or the tax on them, whichever is higher).
3. File the final return GSTR-10 within 3 months of the cancellation order. Missing it brings a notice and late fee.

Proprietorship

• Cancel GST, Shop and Establishment, trade licence and Professional Tax registrations.
• Update or cancel Udyam.
• Close the current account after the last transactions clear.
• File the final ITR for the year of closure. Your PAN continues, as it is personal.

LLP

• File all overdue Form 8 and Form 11.
• Once the LLP has not carried on business for at least a year, apply in Form 24 to strike off its name, with a statement of accounts and partners' consent.
• Alternatively, wind up voluntarily under the insolvency law if it has assets and liabilities to deal with.

Private limited company

• File financial statements and annual returns up to the year the business stopped.
• Extinguish all liabilities and get board and shareholder approval (special resolution or 75% consent by paid-up capital).
• File STK-2 (fee ₹10,000) if the company hasn't done business for two financial years, or never started within a year of incorporation.
• For a solvent company with assets, voluntary liquidation under the insolvency law is the other route.
• After the name is struck off, directors remain liable for past dues, so close properly.

Don't forget

• Surrender TAN and file the final TDS return.
• Close EPF and ESI codes after final contributions.
• Keep books and records for at least 8 years.

Related

• Received an ROC or MCA notice?
• GST registration cancelled or suspended?
• LLP compliance
• Annual ROC filings and due dates

Sources

• Companies Act, 2013 (as amended)