Sole proprietorships close for many reasons, including poor economic conditions or simply a change in the owner’s health or personal circumstances. A sole proprietor takes full responsibility for all business liabilities and debts not only during the operation of the business but also after it ceases to exist. Georgia regulations do not require sole proprietorships to register formally with the state authorities, and therefore, few formalities are required to close the business.
Notification
If you decide to close a sole proprietorship, you should notify all clients, customers and business associates, if possible in writing. If you have a business website, you should post a notification of the closure on the site. Depending on the nature of the business, you may also arrange for disposal or sale of all excess stock. If you operate a separate business bank account, you should close this once you have finalized all accounts.
Business Name
Sole proprietors in Georgia who run their business under a fictitious or assumed name -- known as a DBA -- should be registered with the clerk of the superior court for the county where they conduct the majority of their business. When they close, they must tell the clerk that they intend to cease trading under their fictitious name. Sole proprietors who operate under a name that identifies them as the owner of the business do not need to carry out this step.
Tax
Sole proprietors continue to be liable for all business taxes, even after closure. You should inform the IRS of the closure of the business and file an annual return for the last year of business. You should also inform the Georgia tax authorities of the change of circumstances. Georgia law allows each county to levy business taxes, and these regulations vary from county to county. Many counties levy business taxes in advance, and you may be entitled to a partial refund if you close the business.
Outstanding Debts
Sole proprietors should pay all unsettled business debts before they cease to trade. If they fail to do so, creditors have a right to sue them for unpaid invoices. You should ask all creditors to submit their invoices by a specific date, to aid your final accounting process.
