Individual entrepreneurs in Armenia often face the need to temporarily suspend their sole proprietorship (SP) activities. In such cases, freezing the SP is the optimal solution. Unlike full liquidation, freezing of Sole Proprietorship allows an entrepreneur to retain their SP status and resume operations in the future without having to re-register the business. This article provides a detailed overview of what SP freezing is, how it works, its advantages, and how it differs from liquidation.
How to Freeze an SP in Armenia
Freezing an SP means temporarily suspending business activities, during which the tax authority records that the SP is no longer conducting operations. This process allows the SP owner to pause activity without paying taxes or social contributions during the downtime.
The main benefit of freezing is the ability to unfreeze the SP at any time and return to business operations without additional costs or re-registration.
Key Features:
- No tax charges: Taxes and social payments are not accrued from the moment of suspension
- SP remains registered: The SP stays in the system, making future reactivation easier
- Flexibility: You can freeze and unfreeze the SP at any time, with no limits on the number of times or duration
Step-by-Step Process
Freezing an SP is done through the entrepreneur’s online tax account. The entire process usually takes just a few hours if all conditions are met.
Step 1: Prepare for Freezing
Before freezing a Sole Proprietorship, the following must be completed:
- Submit all prior tax declarations:
Even if there was no income, zero declarations must be submitted - Settle any debts:
All tax and social liabilities up to the freeze date must be paid. This includes taxes, fines, and fees - Cease business activity:
Make sure there are no ongoing transactions, bank account activity, or issued invoices
Step 2: Tax Account Actions
Log in to your tax account or provide access to your accountant
Navigate to the SP status management section
Select the “Freeze” option and confirm the changes
After that, the SP is officially frozen, and the entrepreneur is exempt from tax and social obligations
Step 3: Compliance During Freeze
During the freeze, the entrepreneur is prohibited from:
- Using SP-related bank accounts
- Issuing invoices or other financial documents
- Conducting any type of business activity
Violations may result in fines or revocation of the freeze status
Unfreezing the SP: Resuming Business Activity
When the entrepreneur is ready to resume business, the unfreezing process is simple and similar to freezing:
- Log in to your tax account
- Remove the “Freeze” status
- Ensure all SP functions (accounts, invoicing, transactions) are restored
You can then continue business operations as normal
Freezing vs. Liquidating an SP: What’s the Difference?
| Criteria | Freezing | Liquidation |
|---|---|---|
| SP status | Remains registered | Fully terminated |
| Taxes and fees | Not charged after freezing a Sole Proprietorship | All debts must be paid |
| Reactivation | Can be resumed at any time | Requires new registration |
| Process | Fast and simple (online) | Lengthy, includes account closures |
| Documents | Minimal | Requires more paperwork |
| Financial activity | Not allowed during freeze | Fully ceased |
When to choose freezing:
- You plan to resume operations in the future
- You need a temporary pause but want to retain SP status
When to choose liquidation:
- You are permanently ending your business
- You do not plan to return to entrepreneurial activity
Advantages of Freezing an SP
- Saves time and resources: No need to re-register the SP when returning to business
- Simple process: Done in just a few steps through the tax account
- Flexibility: You can freeze as many times as needed, for any duration
FAQ
- How long does it take to freeze an SP?
Instantly after updating the status in the tax account - Can I freeze the SP for an indefinite period?
Yes, there is no legal limit on the freeze period - Do I have to pay taxes during the freeze?
No
Conclusion
Freezing a sole proprietorship in Armenia is a convenient and flexible tool for entrepreneurs temporarily pausing their business or relocating operations to another country (for example, opening an SP in Kyrgyzstan). This process allows you to maintain your business without re-registration once you’re ready to resume operations. Unlike liquidation, freezing saves time and resources and offers flexibility in business management.
If you want to freeze your SP, it’s important to follow all the steps and prepare documents correctly. To ensure everything is done properly, we recommend consulting experienced accountants or legal professionals to avoid errors.
Contact us and we will help you freeze your sole proprietorship (SP). We also assist with remote registration of SPs and LLCs, as well as provide accounting services.
