Closing a Sole Proprietorship in GA

By Holly Cameron

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.


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.

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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.

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Sole Proprietorship in Georgia

A sole proprietorship is a common business entity because it is relatively simple to set up and allows for a great deal of flexibility in how the business is managed. As a sole proprietor, you have complete control over the management of the business, take all the profits and avoid corporate income taxation. Although there are no registration requirements to initially form a sole proprietorship in Georgia, depending on the type of business, the Georgia Secretary of State recommends professional, local and tax registration.

Dissolution of Sole Proprietorship

When it comes time to discontinue the operations of a business formed as a sole proprietorship, owners may find obstacles that prevent them from simply walking away from the company. This is due to the fact that, throughout the life of the organization, the assets and liabilities of the business have become intermingled with the assets and liabilities of the individual owner. The result is that complete dissolution of a sole proprietorship may be more of a challenge than with other business entities.

How to Set Up a New Sole Proprietorship in Indiana

Sole proprietorships are owned by a single individual who operates the business as an extension of his personal affairs. In Indiana, sole proprietorships and general partnerships are classified as informal associations; they are not required to file formation documents with the secretary of state to obtain permission to do business. A sole proprietor, such as a professional photographer, can start his business and operate it within the state at his own discretion. However, if a sole proprietor wants to use an assumed business name, operate in a state-regulated industry, collect sales taxes, hire employees or is located in certain areas of the state, he may have to submit special registrations to conform with requirements in those areas.

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