Terminating a business name
When you want to terminate your private entrepreneur operations, close down the business, pay all your business debts, give up your business assets and make the termination notification. Make sure to submit tax returns for all taxes and other payments and pay them. If you receive substantial one-off income when closing down your private entrepreneur operations, you can request income spreading from the Finnish Tax Administration.
No official procedures or specific reasons are required if you want to terminate your private entrepreneur business.
When you want to terminate the operations, close down the firm and pay all its debts. You must also give up your business assets by selling them or by transferring them for your own private use.
If your company has enterprise mortgages (assets used as collateral for funding), they must be redeemed or transferred to another company.
Send a termination notification to the trade register and the tax administration. You must make the notification as soon as you have closed down your business, you have paid all your business debts and given up your business assets. After your notification has been registered, your company is removed from the trade register and the registers of the Finnish Tax Administration.
Send the required notifications to the authorities and make all payments by the due date even if you had closed down your business operations long before that. For example, make sure to file the annual tax returns, and pay value added taxes and employer's contributions.
Check the amounts that you have to pay as tax prepayments when terminating your business operations. If necessary, seek changes to tax prepayments so that you do not pay too much or too little in taxes.
Remember to cancel all insurance policies and other agreements connected to your business operations.
Remember also that even after you have closed down your company, you must keep its accounts and financial statements in accordance with the Accounting Act (at least six to ten years after the end of the last financial year).
Note that after your termination notification has been registered, anybody can start using the name of your former company. If you are planning to continue your business at a later date, interruption of business operations may be a better option. If you decide to interrupt your business operations, you must also submit a notification of this to the Business Information System.
When you give up the assets of your private entrepreneur business as part of the closing down of the operations, the impacts of the asset sales or transfers to your private use are taken into account in the calculation of the business income in the last tax year.
It may result in a large one-off taxable income. You must pay capital gains tax and earned income tax on the income, depending on the net assets of your private entrepreneur business.
You can, however, reduce the tax burden caused by the income through income spreading. In income spreading, one-off income is divided over several years so that the taxes that you have to pay during the year in which you earned the income does not become unreasonable.
Remember to request income spreading from the Finnish Tax Administration before the taxation for that year is finalised. You can request income spreading by for example attaching a free-form request for income spreading to your tax return. You can also send the request electronically in the MyTax service.
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