3 Disadvantages of Closure of Individual Entrepreneurs and Procedures for Reporting Closure
Today, I would like to learn about the disadvantages of closing a private business and the procedure for reporting closure.
Whatever the reason, if you decide to close your business, you need to thoroughly examine all the procedures and finish them cleanly so that there is no setback.
Finishing a business is just as important as starting it.
Please refer to the information below to be aware of the points to keep in mind and preparations for reporting individual business closure.
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Individual business closure report procedure
Before looking at the disadvantages of individual business closure, let’s learn about the procedure and method of reporting individual business closure. 개인사업자 휴업신고
Individual business closure reports can be made at the tax office or at Hometax, the website of the National Tax Service.
Please check the details below and proceed with the personal business closure report by the method you prefer. 좋은뉴스
Tax office (offline)
Report closure
The first step is to go to the tax office and file a business closure report.
There is nothing difficult about how to report an individual business closure itself, so if the tax office is not located near your workplace or home, you do not have to go far to report it.
However, it is okay to visit the tax office if you do not feel comfortable handling these complaints online yourself.
This is because the tax office has the advantage of being able to ask questions to the person in charge and receive confirmation during the process if you file a business closure report.
The following three things are required (materials to be prepared) when filing an individual business closure report at the tax office.
Business Registration
ID
Suspension/Closure Report
Business closure/closure reports, called business closure notification documents, are available at the tax office, so you do not need to prepare them yourself.
The notice of closure consists of the following:
Individual Business Closure Report – Closure Report
For those of you who already need the form, we have left a download link below, so please use it.
Download IRS Closure/Closure Report Form
Unlike the declaration form, you must bring your ID and business registration certificate as an individual entrepreneur.
Many people wonder if there are any disadvantages to closing a business if you do not return the business registration certificate when filing a business closure report.
If you do not have a business registration certificate to be returned, in principle, it is correct to return it after reissuance.
However, if the business registration certificate is actually lost and cannot be returned, there is no need to worry as there is no disadvantage even if the business registration certificate is not reissued and only the reason for loss is entered in the report for suspension/closure of business.
You will be able to finish it without difficulty by referring to the sample provided at the tax office on how to fill out a report of suspension/closure of business.
Please refer to the sample and fill out all the parts you know, and supplement and submit the parts that are difficult to write with the help of the person in charge.
VAT Report
When an individual entrepreneur files a business closure report, he/she is obligated to report/pay VAT by the 25th of the month following the month in which the business closure date belongs (for example, February 25 if the business closure was reported in January).
Therefore, it is recommended to fill out the VAT finalization report for general taxpayers immediately after reporting the closure of business, and go to the VAT department to complete the report and payment.
At this time, if there is no sales or purchases, so there is no history to report for VAT, you can write ‘no performance’ in the tax amount part of the report.
If you do not file a VAT report because there is no sales or purchases, there will be a disadvantage.
If VAT reporting is complicated, these days, there are many cheap agency services such as SSEM and Save Me Tax Accountant, so it is good to use these services to process business closure and VAT reporting as an agency.
For more information, please check under ‘How to avoid being disadvantaged by the closure of an individual business?’
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Hometax (online)
Report closure
Next, let’s look at the procedure for reporting individual business closure at Hometax.
As I’ll explain below, personally, I think it’s better to report at HomeTax rather than visiting the tax office because the procedure for reporting business closure is not very complicated or difficult.
When filing an individual business closure report at Hometax, no separate documents are required, only a means of identification is required.
Joint certificate (formerly public certificate)
Simple authentication (KakaoTalk, Naver, bank certificate, carrier certificate, Samsung Pass, etc.)
This is a typical identity verification method.
So, let’s take a look at the process of filing a personal business closure in order.
First, go to the Home Tax website of the IRS below.
Go to the website of the National Tax Service
Next, go to the application/submission menu at the top and click Report Suspended Business under Application Tasks.
How to report individual business closure
Now you can log in with the prepared identity verification method.
It is more convenient to proceed with a joint, financial certificate or simple authentication rather than an ID or non-member login.
Personally, I prefer simple authentication that can be used with just a mobile phone.
After logging in, fill out the Suspension/Closure Report.
It is no different from the contents of the form used when reporting at the tax office (introduced earlier), and it is rather simple because the business information is already stored.
How to report individual business closure
After entering the details of the application, including the date of closure and the reason for closure, press the Apply button to complete all business closure reports.
Simple, right?
VAT Report
Next, let’s look at how to report VAT at Hometax.
Just like when you report at the tax office, you can also file a VAT report at Home Tax.
You can click VAT under Report/Payment at the top of the VAT report menu.
How to report individual business closure – VAT
Here, you can use the regular report (determination of business closure) menu shown below, and you can select the appropriate menu according to the type of taxpayer.
How to report individual business closure – VAT
The VAT report screen is shown below.
How to report individual business closure – VAT
There is nothing to prepare for the report, so you just need to refer to the following items in advance.
How to report mail order closure
Recently, it seems that there are many cases in which the mail-order business is closed after challenging it, so let’s look at how to report the mail-order business closure.
Telecommunication sales business must be reported separately from individual business closure reports, and can be reported on the government 24 website, not Hometax.
To report mail-order closure, go to the Government 24 website below.
☞ Go to the government24 homepage
In the middle of the screen, enter ‘Closure of mail-order business’, and then go to the menu on the right side of the report of closure of mail-order business – city, county, district.
Mail order business closure report
And in the report, company information and
Mail order business closure report
All you have to do is write the details of the closure report (date and reason).
Mail order business closure report
How to avoid being penalized for closing your business?
VAT Report
In the method of reporting the closure of an individual business operator, we explained the duty to report VAT and how to report it.
Please complete the VAT report/payment within the period by referring to the information introduced.
Among the disadvantages of individual business closure, the most representative are the penalty tax for non-reporting of value-added tax and the penalty tax for delayed payment.
The penalty tax is calculated and imposed as follows, so be sure to report it to avoid unnecessary disadvantages.
Penalty tax for non-reporting: 20% of the tax to be paid
Penalty tax for late payment: unpaid tax amount X number of days of delay X 0.025% (interest rate)
You may think that there is no penalty tax if there is no performance, but if you omit the report because there is nothing to report, you should be careful as a cumbersome revision report may occur and (with a low probability) a tax investigation may come out.
Personally, if you are not sure, I think it is better to pay the cost and use the tax reporting agency service.
Considering the time to find out and the anxiety of not knowing whether you did it right, leaving it to the experts is beneficial in many ways.
Global Income Tax Report and Payment
Even if you only filed a business closure report, you must file a comprehensive income tax return for the following year.
Since the tax period for global income tax is from January 1st to December 31st, you must file a final tax return and pay income tax during the global income tax reporting and payment period (May) of the following year.
Therefore, it is important to keep the documents necessary for filing your income tax return (what you need to prove).
Even if you have filed a business closure report, if you do not file an income tax return the following year, you will be subject to delinquent management, and there may be restrictions when reopening your business after closing your business.
Therefore, do not discard all the related documents just because you have reported the closure of your individual business, and you must be careful not to be disadvantaged by completing your income tax return for the following year.
> How to check who is subject to global income tax in 3 minutes
Application for Adjustment of National Pension and Health Insurance
Last but not least, the disadvantages of closing a private business are the national pension and health insurance premiums.
Even if the business is closed, the payment amount is evaluated based on the business operation, so it is possible to pay an unnecessary large amount.
Please note that the payment amount can be adjusted by submitting a certificate of business closure to the National Pension Service and the National Health Insurance Corporation after reporting the business closure.
> Confirmation of the expected amount of the national pension and application for suspension of payment
concluding
We also looked at the disadvantages of closing a private business.
There are a lot of things to take care of because the closing procedure is somewhat cumbersome, but even if you don’t, you have to be careful not to get disadvantaged in a difficult situation.
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What are the things I need to take care of to avoid being disadvantaged by the closure of my business?
In order not to be disadvantaged by individual business closure, you must report and pay value-added tax and global income tax, and submit a certificate of business closure to the National Pension Service and Health Insurance Corporation to adjust the payment amount.
Do I have to file a value-added tax return even if I am a sole proprietor who has not had purchases?
Regardless of purchase or sale, individual entrepreneurs must report and pay additional value after closing their business.
What are the requirements for an individual entrepreneur to file a business closure report?
When visiting the tax office to report business closure,
You need a business report, and when you report business closure at Home Tax, you only need a means of authentication.
After reporting the closure, do I have to report the closure of the mail order business separately?
If you have filed a mail-order business report, you must also report the mail-order business closure separately after filing the individual business closure report. You can report mail order closure on the Government 24 website.