Closing as a sole proprietor
What to do when you stop trading as yourself: SARS, staff, licences, the bank account, debts that stay yours, and records.
About this page
Written by AI (Claude, Anthropic). An AI checked it on 13 October 2026 against what the sources register says about the sources below. Some of those sources could not be opened, and each of them says so. No person has checked it yet. Rules change: check the official source before you act. Not legal, tax or financial advice.
AI-checked An AI compared the facts on this page with the sources register. It could not open every source. An AI can miss mistakes.
On this page (13 sections)
Words used on this page
Plain meanings for the terms used in this file. The full list is in Glossary.
- Sole proprietor
- You trade as yourself. No company. The business and you are the same person in law.
- ITR12
- The yearly tax return for people. Your business profit goes on it.
- Provisional tax
- Paying tax in advance, twice a year, because no employer deducts it for you.
- VAT vendor
- A business registered for VAT.
- EMP201 / EMP501
- Monthly payroll return / twice-yearly payroll reconciliation.
- UIF
- Unemployment Insurance Fund, run by the Department of Employment and Labour. Your employees can claim from it when their job ends.
- Prescription
- A debt you leave too long stops being claimable. Three years for most ordinary debts.
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Running a Pty Ltd covers closing a company. This file is for the other case: you trade as yourself, and you want to stop.
A sole proprietor has no business to deregister. You never registered one. So closing is not one application. It is a short list of people to tell, and a list of things that stay yours after the last sale.
The short version: tell everyone you registered with that you have stopped, file the last returns, and keep your records for five years. Your debts do not close with the business. They were always yours.
What closing means for a sole proprietor
In law, you and the business are one person. Business income goes on your personal tax return. If the business owes money, you owe it. See Register: what you actually need.
That has three consequences when you stop.
There is nothing to deregister with CIPC. A sole proprietor never registered the business there. A trading name like "Thabo's Plumbing" was never registered anywhere either, so there is nothing to cancel. You simply stop using it.
Your SARS tax number stays. You did not register the business with SARS. You registered yourself, and you are still a taxpayer after the business stops.
Everything the business owed, and everything owed to it, is still yours. Closing does not end a debt.
Pick a closing date and write it down. Every step below works from that date.
Tell SARS
Income tax: the last ITR12 with business income
Business profit goes on your normal ITR12, in the "local business income" section. For the tax year in which you stop, declare the business income and expenses up to your closing date, in the same section. File it in the normal filing season. See Tax and SARS.
After that year, whether you still file depends on your income from then on, not on the business. Check each year.
Provisional tax
If you own a business, the Income Tax Act says you must register as a provisional taxpayer. Once you stop trading, that reason falls away.
Ask SARS how to end your registration as a provisional taxpayer. Until SARS confirms it in writing, keep submitting your IRP6 returns on the usual dates in Tax and SARS. An IRP6 return can be requested and submitted even if the provisional tax payment is nil.
In plain words
You paid tax in advance because you ran a business. When you stop, ask SARS to take you off provisional tax. Until SARS says yes in writing, keep filing the twice-yearly form, even if it shows zero.
Filing a zero return costs nothing. Not filing creates penalties that grow every month.
Turnover tax, if you registered for it
Once registered for turnover tax, you stay in the system unless you deregister voluntarily or exceed R2.3 million. Stopping trading does not take you out by itself. Ask SARS to deregister you from turnover tax as well.
VAT, if you are registered
If you are a VAT vendor, you must tell SARS that you have stopped trading, and SARS cancels the VAT registration. Section 24 of the Value-Added Tax Act covers this. Keep filing for every VAT period until SARS confirms the cancellation.
Watch for one cost. When the registration ends, section 8(2) of the Act treats the stock and business assets you still own as supplied, so VAT can be due on their value at the end.
In plain words
Tell SARS you have stopped, and it cancels your VAT number. The stock and equipment you keep can still cost you VAT at the end. Ask a tax practitioner to work it out before you apply.
Once the registration is cancelled, you are no longer registered. Do not write "Tax Invoice" on anything you issue after that, and do not charge VAT. Charging VAT you are not registered for is fraud.
If you had staff
Skip this part if you worked alone. A sole proprietor cannot contribute to UIF for themselves and is not an employee under COIDA, so there is nothing to close for you personally. See You are the business.
If you registered with SARS as an employer for your staff:
- Submit the EMP201 for the last month you paid anyone, by the 7th of the following month, as usual.
- Make sure the EMP501 reconciliation covers every month you paid staff.
- Then ask SARS to deregister you as an employer.
Your employees may be able to claim from the Unemployment Insurance Fund when their job ends. The Unemployment Insurance Act requires employers to give the Fund information about their employees, including when they leave. Ask the Fund what it needs from you for each employee, and give your employees what they need to claim.
If you registered with the Compensation Fund for your staff, tell the Fund that you no longer employ anyone. Ask what it needs from you for the last period, including the Return of Earnings.
Employment law is outside the scope of this toolkit. Before you give anyone notice, get proper advice. The rules on notice and dismissal are strict, and mistakes are expensive to unwind.
Licences and registrations
Go through every licence and registration the business holds. For each one, tell the office that issued it that you have stopped, and ask what it needs from you. The usual ones in this toolkit:
- Municipal trading licence. Issued by your municipality under the Businesses Act 71 of 1991. The licence is tied to the premises, not to you. Tell the municipal Business Licensing office. See What you need to sell things.
- Certificate of Acceptability, for a food business. It is specific to the premises and cannot be transferred to a new location or a new owner. If someone buys your food business, they need their own.
- SAPS second-hand goods registration. The holder of a certificate of registration must notify the National Commissioner in writing within 30 days if there is any change to the information submitted in the application. Treat stopping trading as such a change. Tell the Designated Police Officer at your local SAPS station in writing, and keep your register of transactions for five years.
- POPIA information officer. If you registered yourself as information officer with the Information Regulator at inforegulator.org.za(external link) Official , ask the Regulator how to update the registration when the business stops.
- Compensation Fund, if you had staff. See the part above.
In plain words
Tell every office that gave you a licence or a registration that you have stopped. Ask each one what it needs.
Customer information does not close with the business either. POPIA says you may keep personal information only as long as you need it, unless a law requires you to keep it longer. Your tax records are such a case. After that, delete or destroy it.
Your bank account
Your business account is an account in your own name. Closing the business does not close it.
Keep it open until the last customer has paid, the last supplier is paid, and SARS is settled. Then close it, or keep it as a personal account. Either way, download the statements first. They are part of your records.
Cancel what runs through it before you close it: a card machine contract, debit orders, and subscriptions you only needed for the business.
Debts: yours before, yours after
If the business owes money, you owe it. That does not change when you stop trading. Your house and your car can still be taken to pay a business debt.
So before you announce the closing:
- List every supplier, lender and landlord you owe, and plan how you will pay each one.
- List every customer who paid a deposit for work you have not done. Decide whether you will finish the work or pay the money back. Either way, the money is owed by you.
- Pay SARS what you owe. Tax debt is personal too.
Money owed to you is still yours to collect. Do not wait years. A monetary claim must generally be instituted within three years of the date the debt arose, or it prescribes and you lose it. You are the business sets out how to chase it.
Records: keep them for five years
Keep everything for five years from the date you submit the return. That includes the return for the year you stopped, so your last records must be kept for five years after your last ITR12 with business income.
Keep the same things you kept while trading: the bank statements, the photographed slips, the cash book spreadsheet, and a copy of every invoice you issued. See Tax and SARS.
If you were a second-hand goods dealer, keep the SAPS register of transactions for five years as well.
Put it all in one folder called "Business records, closed", with the closing date in the name. Note somewhere a trusted person can find it where the folder is, and when it may be destroyed.
Your closing checklist
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Sources for this page
23 sources
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SARS — Turnover Tax Opens the official website Official source
What this source supports: micro business qualification, the R2.3 million threshold for years of assessment ending between 1 March 2026 and 28 February 2027, reduced record-keeping.
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SARS — Tax calendar Opens the official website Official source
What this source supports: IRP6 dates of 31 August, 28 February and 30 September; EMP201 due by the 7th of the following month or the business day before if the 7th falls on a weekend or public holiday; EMP501 interim season 1 September to 31 October and annual season 1 April to 31 May.
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SARS — Guide to Provisional Tax Opens the official website Official source
What this source supports: two provisional payments per year, the optional third top-up payment, and that a nil IRP6 can still be submitted.
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Information Regulator of South Africa Opens the official website Official source
What this source supports: Register your information officer here. Free.
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SAPS — Second-Hand Goods Act 6 of 2009 (full text) Opens the official website Official source
What this source supports: dealer registration duty, identity verification, five-year record retention, motor vehicle register particulars.
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NADA, SAPS dealer inspections Opens a website that is not official Not an official source
What this source supports: the 30-day notification duty, the SAPS 604 form for a change of responsible person, and inspection rights.
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Regulation R638 of 2018 Opens the official website Official source
What this source supports: under the Foodstuffs, Cosmetics and Disinfectants Act 54 of 1972 — General Hygiene Requirements for Food Premises, the Transport of Food and Related Matters. Replaced R962. Available through gov.za(external link) Official .
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Businesses Act 71 of 1991 Not an official source
What this source supports: Administered by your local municipality, not by national government. There is no single national list of licensable businesses, because municipalities apply the Act through their own by-laws.
An Act that municipalities apply through their own by-laws; the register points readers to their municipality instead of a link.
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UIF and the self-employed Opens a website that is not official Not an official source
What this source supports: Unemployment Insurance Contributions Act 2002, section 1 — "employee" means a natural person receiving remuneration for services rendered, excluding an independent contractor. The Tax Faculty applies this directly: https://taxfaculty.ac.za/faq/general_faqs/solution/1170(external link) — a sole proprietor cannot contribute to the UIF because a sole proprietor cannot be an employee who becomes unemployed.
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COIDA and working directors Opens a website that is not official Not an official source
What this source supports: The Act's definition of employee includes a director or member of a body corporate who has entered into a contract of service, in so far as they act within the scope of that employment, and excludes shareholders or silent partners who only receive dividends or profit share. See https://www.eohcb.co.za/post/coida-who-must-register-for-coida(external link) and https://www.mdacc.co.za/do-i-need-to-register-for-workmens-compensation/(external link). That a working director paid a monthly salary must be registered and submit a Return of Earnings even as the only employee is from ClearComply's 2026 guide: https://www.clearcomply.co.za/blog/coida-compensation-fund-south-africa(external link). Sole proprietors and partners are not employees under COIDA: https://labourguide.co.za/coid/compensation-fund-registrations/compensation-fund-registration(external link)
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Tax Administration Act 28 of 2011 Official source
What this source supports: records must be kept for five years from the date the return they relate to was submitted (section 29). Not opened when this entry was added. Confirm the section in the Act before relying on it.
An Act cited for Closing as a sole proprietor without a link: the environment that added it on 13 October 2026 could not reach the government or law-report websites to open and link the text, and the entry says it was not opened.
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Value-Added Tax Act 89 of 1991, sections 8(2) and 24 Official source
What this source supports: a vendor who stops carrying on an enterprise must tell SARS, which then cancels the VAT registration (section 24); goods and assets the vendor still holds when the registration ends are treated as supplied, so VAT can be due on them (section 8(2)). Not opened when this entry was added. Confirm both sections in the Act before relying on them.
An Act cited for Closing as a sole proprietor without a link: the environment that added it on 13 October 2026 could not reach the government or law-report websites to open and link the text, and the entry says it was not opened.
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Unemployment Insurance Act 63 of 2001 Official source
What this source supports: employees who become unemployed can claim unemployment benefits from the Unemployment Insurance Fund, and employers must give the Fund information about their employees, including when they leave. Not opened when this entry was added. Confirm in the Act, or with the Department of Employment and Labour, before relying on it.
An Act cited for Closing as a sole proprietor without a link: the environment that added it on 13 October 2026 could not reach the government or law-report websites to open and link the text, and the entry says it was not opened.
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Protection of Personal Information Act 4 of 2013, section 14 Official source
What this source supports: personal information may be kept only as long as it is needed, unless a law requires it to be kept longer, and must then be destroyed or deleted. Not opened when this entry was added. Confirm the section in the Act before relying on it.
An Act cited for Closing as a sole proprietor without a link: the environment that added it on 13 October 2026 could not reach the government or law-report websites to open and link the text, and the entry says it was not opened.
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Prescription Act 68 of 1969, section 11(d) Official source
What this source supports: most ordinary debts prescribe after three years. Not opened when this entry was added. Confirm the section in the Act before relying on it.
An Act cited for Closing as a sole proprietor without a link: the environment that added it on 13 October 2026 could not reach the government or law-report websites to open and link the text, and the entry says it was not opened.
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Acts and regulations
- Income Tax Act 58 of 1962 Income tax, provisional tax, turnover tax (Sixth Schedule), small business corporations (s12E), assessed loss ring-fencing (s20A)
- Value-Added Tax Act 89 of 1991 VAT registration, tax invoices (s20), notional input tax on second-hand goods (s20(8)), cancellation when you stop trading (s24) and VAT on assets kept at cancellation (s8(2)); s24 and s8(2) not opened: see "Closing as a sole proprietor" below
- Protection of Personal Information Act 4 of 2013 Data protection, information officer registration (s55), keeping personal information only as long as needed (s14; not opened: see "Closing as a sole proprietor" below)
- Businesses Act 71 of 1991 Municipal trading licences for food, health and entertainment businesses
- Second-Hand Goods Act 6 of 2009 Dealer registration with SAPS, transaction registers, motor vehicle records
- Tax Administration Act 28 of 2011 Keeping records for five years after the return they relate to was submitted (s29). Not opened when this row was added: see "Closing as a sole proprietor" below
- Unemployment Insurance Act 63 of 2001 Unemployment benefits from the Unemployment Insurance Fund, and the information employers must give the Fund about employees, including when they leave. Not opened when this row was added: see "Closing as a sole proprietor" below
- Prescription Act 68 of 1969 When an ordinary debt can no longer be claimed: three years for most debts (s11(d)). Not opened when this row was added: see "Closing as a sole proprietor" below