Step-by-step plan: Ending your sole proprietorship
Closing a sole proprietorship is straightforward. You deregister your business with KVK. But, this does have consequences. For example, you will no longer have access to your business bank account. So please read this step-by-step guide to find out what you need to arrange before deregistering your business.
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 important financial matters. For example:
When you end your business, all stocks and company assets become your private assets. This includes, for example, your company car. You as an entrepreneur supply these assets to yourself as a private person. If you deducted VAT when you bought the items, 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. Contact the financier who gave you the loan.
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 for taking over, buying out, or cancelling the lease.
After you end your sole proprietorship, you remain liable for risks. For example, you still have to pay off your debts. . Do you have business liability insurance? If so, check whether the risks associated with ending your business are covered. This is called run-off risk (uitlooprisico) .
Make sure you cancel contracts and insurance policies of your sole proprietorship. For instance:
- business insurance
- permits
- rental agreements
- phone numbers
- subscriptions
Ask your bank about the procedure for cancelling a business bank account. Before you close your business bank account, you must in any case:
- Download all bank statements and the annual financial statement.
- Stop current debit agreements and periodic transfers.
- Cancel linked credit cards and insurance.
Do you have to end your sole proprietorship because your company is in debt? The KVK Debt flowchart 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 may have to file for bankruptcy.
Do you employ staff? Tell them first that you are going to end your business so they can look for other work in the meantime.
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).
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.
If you have to close your business because it is no longer generating enough income, 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. It is payable for a maximum of 12 months. If you are unable to wind up your business within 12 months, you may be granted a 12-month extension. You must meet these conditions:
- you are self-employed
- you have worked at least 1,225 hours per year in your business
- you have to close your business because you are no longer earning enough from it
- you cannot close the business immediately (if you can, you should apply for social assistance benefits)
Apply for Bbz at your municipality. Not sure whether you are entitled to Bbz? Do the Bbz check (in Dutch).
Are you aged 55 or over, but not yet receiving a state pension? And does your business no longer generate enough income for you to live on? If so, you may be eligible for the Older and Partially Disabled Self-Employed Income Support (IOAZ).
The main conditions:
- You have worked continuously for the past 10 years, including at least the last 3 years as a self-employed person
- You worked 1,225 hours per year (or more) in your own business. That is an average of around 24 hours per week
- The profit from your business averaged less than €27,021 over the last 3 years
- You expect your future income to be less than €27,597
- If you end your business, your monthly income will be below the social minimum
- You will end your business within 1.5 years of applying for the IOAZ benefit
Apply for the IOAZ benefit at the municipality where you live.
If you are able to stop working immediately and have no other job or income, you can apply for a social assistance benefit (bijstanduitkering).
There are conditions attached to this benefit: for example, you must not have too many assets such as savings, your own home, investments, and valuables.
Read more about social assistance at rijksoverheid.nl (in Dutch).
Do you want to stop working as a self-employed professional? And did you have an unemployment benefit (WW) when you started your business? In some cases, you can get your old unemployment benefit back. This is called revival of WW benefit.
You do not apply for WW again through your municipality, but through the UWV. Read more about reviving your previous unemployment benefit.
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 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 5).
After KVK has innformed the Tax Administration 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 final VAT return.
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.