How to close an individual entrepreneur’s current account upon termination of activity and upon transfer to another bank

HomeArticles on bankruptcy of individualsWhen can you open an individual entrepreneur after bankruptcy?

Author of the article: Konstantin Milantiev

Last revised July 16, 2020

Reading time 7 minutes

A bankrupt individual entrepreneur faces many legal consequences: from difficulties in obtaining loans to the temporary impossibility of running a business. But sometimes citizens can open an individual entrepreneur after bankruptcy, without waiting for the ban to expire. Let us consider in what cases citizens retain the opportunity to engage in entrepreneurship, and when they are prohibited from doing so.

Is it possible to open an individual entrepreneur if you have been declared bankrupt as an entrepreneur?

Article 216 of Law No. 127-FZ lists all the consequences of bankruptcy for debtors, including citizen entrepreneurs. These include:

• termination of state registration of an individual as an individual entrepreneur;
• cancellation of licenses, patents and permits previously issued to individual entrepreneurs;
• ban on entrepreneurial activity and company management.

In case of bankruptcy of an entrepreneur, a court decision is sent to the Federal Tax Service. From this moment on, the former individual businessman is subject to a 5-year ban on declaring bankruptcy. However, if commercial activity is the bankrupt’s only source of income, then the state registration of the individual entrepreneur will not be cancelled. But these are special cases, and all of them are considered by the court strictly individually and taking into account the specific case.

Lawyers recommend that citizens liquidate their individual entrepreneurs themselves before going bankrupt. There are several reasons for this:

• checks and control during bankruptcy in relation to individuals are not as serious as in relation to individual entrepreneurs;
• there is a risk that if an entrepreneur goes bankrupt, the individual entrepreneur may be disqualified, which will make it impossible to register him with the tax office in the future;
• Individual entrepreneurs are more often fined and held accountable for untimely bankruptcy, non-payment of taxes and contributions.

Often a citizen has the right to open an individual entrepreneur after bankruptcy. But not at once. And this directly depends on whether he had violations in the course of his business activities and how much he owed in taxes.

If you have debts

Many businessmen are also interested in the question of how to restore an individual entrepreneur if there are financial problems. The legislation does not exempt an individual from paying taxes if the entrepreneur has ceased his activities. He must pay everything on time or face administrative punishment.

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Tax check of an individual entrepreneur after closure of an individual entrepreneur

You can renew an individual entrepreneur after closure if you have debts, adhering to the following recommendations:

• do not delay payments. This applies not only to taxes and insurance premiums, but also to loans. You should not wait for the IP to be canceled by a decision of a judicial authority. If you have hired employees, you must pay wages first;
• It’s good to think everything over and consult with a lawyer. Some entrepreneurs, already a month after opening, are interested in how to close an individual entrepreneur. What provokes them to do this is low profits or working in debt. Don't rush to conclusions and try to get out of the financial hole.

The legislation does not regulate how many times an individual entrepreneur can be opened and closed. Often it is not possible to do this, because there is red tape with papers. After the business ceases to exist, it is necessary to account for all financial manipulations, otherwise further problems with the law may arise.

To properly close your business, you need to know all the legal subtleties, so the help of a specialist in this matter is quite relevant.

Is it possible to open an individual entrepreneur if you have been declared bankrupt as an individual?

A citizen can easily open an individual entrepreneur after the bankruptcy of an individual only if he went bankrupt as an individual. That is, at the time he was declared financially insolvent, he was not registered with the tax authorities as an individual entrepreneur.

According to Art. 213.30 of Law 127-FZ, some of the consequences of bankruptcy for a citizen are:

• for 10 years he is prohibited from holding managerial positions or otherwise managing companies operating in the field of finance and lending;
• for 5 years from the moment of bankruptcy, a citizen is prohibited from managing insurance companies, non-state pension funds, mutual funds, microfinance organizations;
• For 3 years, the bankrupt is prohibited from exercising leadership in other companies or assuming a leadership position.

As you can see, the law does not prohibit the re-registration of individual entrepreneurs after completion of all judicial procedures.

But with a slight amendment - only if the bankrupt did not have debts formed as a result of his previous business. In other words, if you closed an individual entrepreneur with debts and then went bankrupt, then you may be temporarily denied re-registration of the individual entrepreneur.

In addition, the law does not stipulate a ban on the management of unitary legal entities - foundations, autonomous non-profit, religious organizations, public law companies.

Restrictions on types of activities when registering an individual entrepreneur

An individual entrepreneur is a business unit that is limited in the choice of activities. An entrepreneur has the right to engage in not any business, but only that which is permitted to him as an individual small business entity. So, for example, he can open a cafe, but he has the right to sell strong drinks in this cafe only as a legal entity. In this case, the very intention to sell alcohol is a direct obstacle to registering an individual entrepreneur.

Types of activities closed to individual entrepreneurs

When choosing an individual entrepreneur as a form of business activity, you should remember that there are types of services and goods, the production and sale of which is not available to entrepreneurs without forming a legal entity. The list of areas closed to them includes:

• trade and production of alcohol;
• everything related to the development, construction, maintenance, disposal and sale of aviation and military equipment, weapons, ammunition, explosives, pyrotechnics;
• Private security companies;
• services for foreign employment of citizens;
• work of investment funds, mutual funds and non-state pension funds;
• production and sale of medicines and narcotic drugs;
• air transportation;
• space industry.

If one of these areas falls into the sphere of interests of a future businessman, it will be impossible to register an individual entrepreneur with the listed types of activities or to add them to the list later.

Registration of individual entrepreneurs and the Criminal Code

When registering an individual entrepreneur, there are a number of restrictions that apply to persons who fall under the sanctions of the Criminal Code. This is a conviction and criminal prosecution under the following articles:

• Art. 105 – 125 – crimes against health and life (intentional murder, causing death by negligence, harm to health, beatings, threats and other criminal offenses);
• Art. 126 – 127 (kidnapping, human trafficking);
• Art. 131 – 135 (actions related to sexual violence and coercion, also in relation to minors);
• Art. 150 – 157 (criminal actions against children and disabled parents);
• Art. 228 – 233 (participation in illegal drug trafficking);
• Art. 234 – 248 (illegal engagement in activities that pose a danger to the life and health of the population);
• Art. 239 – 245 (crimes against morality);
• Art. 275 – 284 (state crimes, extremism);
• Art. 205 – 227 (terrorism, illegal arms trafficking, violation of public safety).

Restrictions on registration of individual entrepreneurs by applicants with a criminal record or past, with the exception of cases of complete rehabilitation, consist of a ban on engaging in certain types of activities. These include:

• organization of youth and children's camps;
• any types of preschool, school and additional education for children;
• all types of vocational training and preparation of applicants for them;
• activities of medical and sanatorium institutions, medical practice;
• social services;
• any activity in the field of arts and entertainment;
• work of cultural and sports institutions.

If the application for registration of an individual entrepreneur contains OKVED codes corresponding to the listed types of activities, the tax inspectorate makes a request to the Ministry of Internal Affairs about the absence of a criminal record of the potential businessman.

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Responsibility for opening an individual entrepreneur after bankruptcy

If a citizen officially opens an individual entrepreneur after bankruptcy by registering with the tax authority, then no legal consequences will arise for him. With the exception of cases where its activities are subject to mandatory licensing - since the license is canceled in bankruptcy, it is mandatory to obtain it again after state registration of the individual entrepreneur.

Regarding illegal entrepreneurship (commercial activity without the formation of an individual entrepreneur), legislative norms provide for legal liability:

1. Doing business without forming an individual entrepreneur is fraught with a fine of 500 to 2000 rubles.
2. Entrepreneurship without a valid permit or license faces a fine of 2-2.5 thousand rubles with confiscation of goods sold, products produced or raw materials used in production.
3. If illegal commercial activity has caused major damage (2.25 million rubles or more) to citizens, the state or other companies, or has caused the businessman to receive large amounts of income, then criminal liability will be applied to the entrepreneur. It provides for the imposition of a fine of up to 300,000 rubles, or wages or other income for the last 2 years.
4. Alternatively, the businessman may be subject to compulsory labor for up to 480 hours or arrested for up to 6 months.

Determination of the degree of violations and punishment for them is carried out on the basis of the following regulations:

• Art. 171 of the Criminal Code of the Russian Federation on illegal entrepreneurship;
• Art. 14 Code of Administrative Offenses of the Russian Federation, in particular: articles 14.1, 14.4, 14.5 and others;
• Bankruptcy Law No. 127-FZ - in particular, Art. 216, prohibiting entrepreneurship for 5 years after the bankruptcy of an individual entrepreneur.

It is worth noting here that if the state registration of an individual entrepreneur after bankruptcy was carried out in accordance with the norms of the law, and the entrepreneur also obtained all the licenses required to conduct legal activities, then he can work on completely legal grounds. Without fear of fines or prosecution.

Features of re-opening

The re-opening of an individual entrepreneur takes place in the same standard form as the first time. At the same time, no privileges are given for registration in an abbreviated form, since after the closure of the individual enterprise, the information is deleted from the Unified State Register of Individual Entrepreneurs. For this reason, we are not talking about restoration, but about a new registration of a legal entity with different details.

Step-by-step instructions for opening an individual entrepreneur are as follows:

1. Fill out form P21001.
2. Pay the state fee of 800 rubles and keep the receipt of payment.
3. Select the appropriate type of activity according to the classification of OKVED codes.
4. Make a photocopy of your passport.
5. Open a new current account at any bank.
6. Choose the optimal tax system for yourself. If you opt for the simplified tax system, then you need to attach the corresponding notification f. 26.2-1.
7. Submit this package of documents to the local tax office at your place of registration.

Reference! The Federal Tax Service branch at your place of residence cannot accept your documents, so for a new registration of an individual entrepreneur you will have to go to the tax office according to your registration, even if it is located in another region.

If necessary, you can entrust the individual entrepreneur registration procedure to a third party using a notarized power of attorney or a law firm.

Also, some banks may take over the need to transfer documents for registration (for example, Tinkoff Bank or Alfa Bank).

Details about these services can be found on official websites, for example, here: https://tinkoff-start.ru or here https://reg.alfabank.ru/.

According to paragraph 3 of Art. 22.1 of Law No. 129-FZ, documents must be issued within 3 working days on assigning individual entrepreneur status to an individual.

Creating an electronic signature, seals and stamps is not necessary for registering an individual entrepreneur; all these procedures can be carried out after the documents are issued.

Healthy! After registering as an individual entrepreneur, we recommend using a very convenient online service for accounting purposes. The first year for new entrepreneurs is completely free! You can register here.

When can you open a sole proprietorship?

The possibility of state registration of an individual as a business entity is directly influenced by the fact how exactly the bankruptcy was carried out, whether the bankrupt had the status of an individual entrepreneur. Here are the most common cases:

1. If a citizen goes bankrupt as an individual entrepreneur, he will be able to re-register with the tax office only after 5 years.
2. If a citizen went bankrupt as an individual and did not have bankrupt status or debts under an individual entrepreneur at the time of the procedure, then he can register as an entrepreneur immediately after bankruptcy.
3. If a citizen closes an individual entrepreneur and goes bankrupt as an individual with commercial debts, then he also risks receiving a 5-year ban on subsequent registration. The nuance is that in case of tax debts, the Federal Tax Service can challenge the closure of the individual entrepreneur in court, as a result the case will be reclassified as bankruptcy of an individual entrepreneur.

If an entrepreneur has no debts related to his personal business, then the effective and safest solution would be to close the individual entrepreneur before filing an application for recognition of insolvency. Since then only his creditors for personal obligations will participate in the case, nothing will prevent a citizen from re-registering with the tax office as an entrepreneur immediately after bankruptcy.

Preparation of documents and repayment of debts

Often, each bank requires a different list of documents. You can familiarize yourself with it in the contract or by consulting with a bank employee. Usually it is necessary to provide an application for closure, a passport, and an extract from the Unified State Register of Individual Entrepreneurs.

After all the documents have been collected, you need to read the account statement. Then pay off all debts, fines and penalties. When obligations to all interested parties are fulfilled, the remaining funds can be withdrawn. This can be done in advance using a plastic card or at a bank cash desk.