Step-by-step plan: Ending your sole proprietorship
If you decide to end your sole proprietorship, you must notify the Netherlands Chamber of Commerce KVK. You will also have to settle with the Netherlands Tax Administration. Make sure you pay outstanding debts and find out what the consequences are for your liability. Read this checklist to find out how to end your sole proprietorship.
Good to know
In the Netherlands, a sole proprietorship or sole tradership is called an eenmanszaak. Many so-called zzp'ers choose this legal structure.
When you end your sole proprietorship, you have to deal with several financial matters. Pay attention to the following matters:
All stocks and company assets are transferred to your private assets when you stop. This also applies to, for example, your company car. You as an entrepreneur supply these assets to yourself as a private person. If you deducted VAT when you purchased the item, you must now pay VAT on them. The amount of VAT is based on the value of the goods at the time you start to use them privately. It is part of the final VAT return (see step 7).
Transfer the vehicle registration number to your own name
Do you have a vehicle registered in the name of your sole proprietorship? Do not forget to transfer the registration number to your own name when you deregister your company. Read on RDW.nl what you must do.
Does your sole proprietorship have any loans? Check what the agreements are. If you cannot fulfil your obligations, then contact the lender, financier and try to find a solution together.
Do you have a lease car or other lease agreements? Check the duration of the contract. Contact the leasing company to find out what the options are.
After you end your sole proprietorship, you remain liable for risks. For example, you still have to pay off your debts. So, make sure you handle everything properly. Some insurance companies allow you to include risks associated with ending the business in your business liability insurance. This is known as run-off risk (uitlooprisico) and refers to the risk of claims being made after you have ended your business.
Make sure you cancel contracts and insurance policies of your sole proprietorship. For instance:
- phone numbers
- subscriptions
Before you close your business bank account, take care of the following:
- Download all bank statements and the annual financial statement.
- Stop current debit agreements and periodic transfers.
- Cancel linked credit cards and insurance.
Ask your bank about the procedure for cancelling a business bank account.
Are you forced to end your sole proprietorship because your company is in debt? Investigate your options with the KVK Debt flowchart. It will give you tips on how to deal with short-term and long-term debts. For temporary debts, you can first request a suspension of payment. If you are still unable to pay your debts, you must file for bankruptcy.
Do you employ staff? Tell them in time that you are going to end your business. This way your staff can look for different work in the meantime.
Also check which contracts or agreements you have with customers and suppliers. Inform them that you are ending your business and settle any payments with them.
Read more about informing your customers on the KVK website.
You can apply for a benefit via the Decree on Social Assistance to the Self-Employed (Besluit bijstandverlening zelfstandigen, Bbz). The Bbz is a supplement to your income up to the level of social assistance benefit. You must meet a few conditions to be eligible for Bbz benefits:
- You must have worked 1,225 hours per year for your sole proprietorship.
- You cannot stop your business immediately, but you are forced to do so in the near future.
Apply for Bbz at your municipality. Not sure whether you are entitled to Bbz? Do the Bbz check (in Dutch).
In that case, you will receive a supplement to your income until your sole proprietorship is terminated. Apply for Bbz at your municipality.
Then you may be eligible for the Older and Partially Disabled Self-Employed Income Support (IOAZ). With the IOAZ benefit, your income will be supplemented up to social welfare level. You must be able to demonstrate that you have too little income to live on. A wealth test (vermogenstoets) is carried out to determine the amount of the IOAZ benefit (in Dutch). Apply for the IOAZ benefit at the municipality where you live.
Do you have any staff? There are rules that you must follow if you need to dismiss staff. You must apply for a dismissal permit from the Employee Insurance Agenvy, UWV. You must also set out agreements in a social plan, such as a transition payment and help finding new work.
Also notify the Tax Administration of the dismissal. They will then determine that you no longer need to deduct payroll taxes and file returns for your employees. What you need to report is listed under “Step 17 End of withholding obligation or employment” in the Payroll Tax Manual (in Dutch).
Deregister your sole proprietorship (eenmanszaak) from the KVK Business Register. Deregistration is free of charge. The steps of this process are currently only available in Dutch.
- go to Deregistration on KVK.nl
- fill in your KVK number or business name
- choose Opheffen eenmanszaak and on the next page click the button Volgende ('next') to start the filling in your details
As an alternative you can also fill in Form 14: Change business/branch details and post it to KVK. Please note: reporting a change to KVK by post usually takes longer to process. Check the processing times here.
The Netherlands Chamber of Commerce KVK will inform the Tax Administration about the termination. You will receive a letter about the consequences for income tax and VAT. Do you want to apply for a benefit? Do this before deregistering (see step 1).
After the Tax Administration has been informed that your sole proprietorship has been deregistered, you will receive a letter stating that you must submit a final VAT return. Only after you have filed your last VAT return will the Tax Administration send you a letter to confirm that you are no longer an entrepreneur for VAT purposes.
You must file a final income tax return. You will not receive a separate letter about this as you do for the last VAT return (step 7).
After ending your sole proprietorship, you must keep business records for at least 7 years. in some cases even 10 years. This depends on the type of data. You can find more information about this at Belastingdienst.nl (in Dutch). You may also scan your paper records and store them digitally.
Ending your sole proprietorship does not have to be all bad. You can focus on a new direction and make new plans. For example, by finding other work. Read tips for making new plans on KVK.nl.