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Closing Down a Proprietorship Shantanu 4th Yr. NLU, Odisha
Proprietorship• Also known as sole proprietorship.• Only one owner.• Simplest form of business organization.• Proprietorship is not a separate legal entity.
Opening of a Proprietorship (contd…)• A sole proprietorship can be started without taking any burdens of the legal provisions.• Registration not necessary.• Depending upon the rules of the local administration, you may be required to obtain requisite licences.
Opening of a Proprietorhsip• Search the state laws to find out the kinds of licenses you will need to carry on the kind of proprietorship you desire.• Fill the forms cautiously.• Deposit required fees.• Whole process may take 30 to 40 days.
Closing of a Proprietorship (contd…)• Two possible reasons for its closing: (i) wish of proprietor; or (ii) death of proprietor.• In case of death of proprietor, the business will automatically close and cannot be carried forward.
Closing of a Proprietorship• Generally, no need to go through legal procedures.• If the business has licenses, then you need to surrender them.• Surrender according to State laws.• It is advisable to clear all debts before closing of business to avoid future litigations.
Bank Accounts• On the opening of a proprietorship, you should have a bank account.• While closing, you will need to close the account.• Any credit taken from the bank by way of overdrawing or otherwise should also be set off.