Closing your business as a sole trader

Three steps to closing your business if you are a sole trader

If you are a sole trader working for yourself and in business, there comes a time when you have reached the end of the road, and you either want to move to something else or stop running the business altogether.
If you are looking to close your business as a sole trader, there are three steps you need to follow.

Step #1
Inform all your customers of your intention to close your sole trader business. This is important so that you allow them to review any work they have given you and ensure you have completed it to their satisfaction.

Any work that you had said you would do for your customers and make sure for your suppliers that you have paid out all your invoices that are due to them

Step # 2
The second step is to Inform your key suppliers of your intention. Look at your bank account for any subscriptions that you have in place that you're currently paying for, and that you will not need going forward.

Reach out to those suppliers, giving them enough notice as part of their terms and conditions. Informing them of your intention of canceling the payments and canceling the direct debits so that you are not out of pocket paying for services you don’t need.

Step #3
The third step is to prepare the accounts for the year to date. This gives you a complete picture of how much you collected in sales, how much you paid for in expenses, and what profit or loss the business has made.

Once you have those figures, you must report them to HMRC in your self-assessment tax return for that financial year. When you file your self-assessment tax return, you also need to let HMRC know that you are no longer self-employed and you are no longer trading.

If you are not earning any income that is not being taxed at source, you will also need to call HMRC and let them know that you are no longer self-employed and that you do not need to file a self-assessment tax return in the future.

HMRC will write to you confirming that you no longer need to file a self-assessment tax return, and having that acknowledgment from them relieves you of your duties to file an ongoing self-assessment tax return. For many people, this comes as a welcome relief because it is one less thing to do.

If you have any questions about closing your business as a self-employed person, feel free to contact us, and we'll be happy to help.

To your financial Success,
Team gHawk