Deletion of а Sole Proprietorship: when and how is it done?

Historically, entrepreneurs have preferred to operate as sole proprietors. This was largely due to the fact that legislation provided for high requirements in relation to the minimum capital size of commercial companies. Until the amendments to the Commercial Law in 2009, the minimum capital for the establishment of a limited liability company (LLC) was BGN 5,000, while the registration of a sole proprietorship did not require the prior contribution of a sum of money in the form of capital.

Currently, the law provides far more favourable forms for starting a business venture, with the limited liability company remaining the most preferred by entrepreneurs.

Among the most common reasons for the deletion of sole proprietorships are the disadvantages and risks of the commercial activity carried out by a natural person as a sole trader. The procedure for deletion of the sole proprietorship may be initiated when the sole proprietor decides to discontinue its activity for economic reasons or in view of its appointment as a public servant. Another common reason for the closure is the death of the individual.

Who can apply for deletion of a Sole Proprietorship?

- Upon termination of the sole trader's activity or upon establishing his/her residence abroad - the sole proprietor himself

- On the death of the sole proprietor - on the application of their heirs

The death of the sole proprietor, does not lead to the automatic deletion of the enterprise. With the death of the person, the possibility is provided for his heirs to take over the enterprise or to proceed to the dissolution of the enterprise and the deletion of the the sole proprietorship in the Commercial Register. In the event of the continuation of the company's activity, the rights and obligations of the commercial enterprise shall pass to whichever of the heirs has taken over. It should be noted that in this case, the application for cancellation must be signed by all the heirs of the deceased individual. If the company is taken over by only one of the heirs, it is possible for the application to be made by that heir, in which case evidence establishing the previously settled relationship between the heirs must be submitted with the application.

– When the proprietor is put under judicial disability – upon application by the guardian or custodian;

– An application for deletion can be made by an authorized representative;

- In other cases expressly provided for by law, another person may request deletion.

How does the procedure go?

A key prerequisite to the deletion of the Sole proprietorship from the Commercial Register is the presentation of a document issued by the relevant territorial subdivision (TP) of the National Social Insurance Institute (NSI) certifying that the sole trader has submitted all employment documents to the NSI.

The sole proprietor or his heirs need to submit to the National Social Insurance Institution an application-declaration form for the issue of a certificate of delivery of the payrolls referred to in Article 5, par. 10 of the CSR. If the sole proprietor has employed workers, he need to present payrolls and employment documents such as employment contracts, supplementary agreements, orders for appointment, reappointment and termination of employment contracts, orders for unpaid leave taken in excess of 30 working days and all other documents relating to the employment relationship before to the NSSI.

Вaжно е да се отбележи, че документите трябва да бъдат предварително обработени и представени съобразно изискванията в Instruction No. 5 of 30.06.2005 on the receipt and storage of payrolls and employment documents of terminated insurers without a successor.