Main points
- The process of closing a sole proprietorship requires certain steps, such as firing employees, checking debts, and filing a statement of termination of activities.
- Individual entrepreneurs of different groups have different rules regarding the payment of taxes and the single social contribution, which must be taken into account when closing a business.
How to properly close a sole proprietorship / Photo Getty Images
Closing a sole proprietorship is a rather complicated process that requires a certain sequence of actions. These include checking debts, dismissing employees, submitting documents, etc.
How to close a sole proprietorship in 2026?
All processes should be carried out in stages, as described on the 7eminar website.
The first thing to do is to deal with the issue of dismissing employees (if any). The reasons for this may be:
- by agreement of the parties – dismissal can take place “day by day”;
- at the employee's own request – the employee must notify the employer two weeks in advance, but the employment contract can be terminated before the end of the term;
- at the initiative of the employer – the sole proprietor warns employees personally no later than 2 months in advance.
Next comes the check of debts . It is necessary to make final settlements with buyers and suppliers, as well as check the absence of debts for paying taxes “for yourself” and payroll taxes for employees.
Important! All payments from buyers must be received during the period of being in the status of an individual entrepreneur. Income that will be received on a business account after losing the status is taxed according to the rules for individuals – 18% personal income tax and 5% military duty.
You can check the presence of debt in the “Status of settlements with the budget” section in the Taxpayer's Electronic Account.
Individual entrepreneurs of groups 1 and 2 need to take into account that regardless of when the “Application for Termination of Business Activity” is submitted, the single tax is calculated and paid for the full month.
Therefore, the State Tax Service will calculate a single tax for the full month in which the individual entrepreneur ceased business activities,
– explained in the text.
For individual entrepreneurs of group 3, everything is simple – a single tax is paid at a rate of 5% (or 3%) of income. If a person did not receive any profit, then there will be no charges.
Please note! Individual entrepreneurs of groups 1-2 who do not pay the single tax and military levy do not fill out the declaration of a single tax payer – an individual entrepreneur for the period in which the single tax and military levy were not paid.
Regarding military tax: individual entrepreneurs of groups 1-2 pay tax in full, individual entrepreneurs of group 3 – in the amount of 1% of income.
And the sole social contribution in the event of termination of entrepreneurial activity in 2026 is required to be paid in full by the individual entrepreneur. The minimum contribution is 1,902.34 hryvnia per month, and it must be paid for all periods of activity in 2026.
Individual entrepreneurs who may not pay the SSC include:
- old-age pensioners or persons with disabilities who receive relevant social benefits;
- mobilized entrepreneurs;
- Individual entrepreneurs who have a main place of work, if the employer pays SSC for them in an amount not less than the minimum.
What should I do next?
The individual entrepreneur must cancel existing licenses.
- For an individual entrepreneur who uses the PRRO – after making an entry in the Unified State Register about the state registration of the termination of the individual entrepreneur, the PRRO registration is automatically canceled by the fiscal server
- For an individual entrepreneur who uses a RRO, the RRO must be unsealed and deregistered with the State Tax Inspectorate. If necessary, a 20-OPP form is submitted. To unseal, you should contact the service center, which will send a certificate of unsealing to the State Tax Service, and the individual entrepreneur submits an application to the regulatory authorities using form No. 4-RRO.
Please note! The law does not specify the deadline for closing a business account. Therefore, you can close a current account both before and after the termination of your business activity.
To close a business account, an individual entrepreneur submits an application to a bank branch. You also need to obtain statements of account movements.
After the closure procedure is completed, the bank, at the request of the individual entrepreneur, issues a Certificate of Closure of the Business Account .
How to submit an application to the state registrar for termination of an individual entrepreneur?
Option one – submission of an Application for Termination through the State Registrar. The individual entrepreneur submits to the State Registrar an application for state registration of termination of the entrepreneurial activity of an individual entrepreneur using Form 1.
The application can be submitted in paper form to any state registrar in Ukraine. He is obliged to enter the information into the Unified State Register within 24 hours of receipt of the documents.
The second option is to close the individual entrepreneur through “Diya”.
To do this you need:
- Generate an electronic signature (qualified electronic signature).
- Register or log in to the citizen's account on the Action website using an electronic signature.
- Fill out the online form to receive the service.
- Check the information.
- Sign the application using an electronic signature.
The status of the application can be checked in the citizen's account. And if the person worked with the simplified taxation system, then he will be excluded from the register of single tax payers and the register of VAT payers.
From this moment on, the individual entrepreneur is considered closed .
Next, in the Electronic Account in the “Taxpayer Account Data” section, 2 dates should appear for the individual entrepreneur:
- Date of cancellation of registration by the EP payer.
- Date of deregistration.
At the same time, the date of deregistration as a payer of the Unified Social Security System will not appear – it will only occur after the tax audit.
Interesting! Over 250 thousand individual entrepreneurs closed in Ukraine in 11 months of 2025. Most of them are in the capital. On average, individual entrepreneurs “live” for 2.4 years. Entrepreneurs engaged in warehousing activities are the longest-lived, and individual entrepreneurs-couriers “exist” the least. This is evidenced by Opendatabot data.
What else should self-employed individuals know?
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Individual entrepreneurs of groups 2–3 are already receiving financial assistance from the government. These are businesses operating in socially important industries. The amount of the payment depends on the number of employees, but the maximum amount is 15 thousand hryvnias.
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At the same time, the individual entrepreneur group does not affect the future pension. The pension payment for individual entrepreneurs of groups 3, 2 or 1 is always determined by the same formula.