How to Stop a Sole Proprietorship

By Michael Butler

If you have a sole proprietorship, you can decide to stop your business and close your doors if your venture isn't successful. Before officially closing the business, you should make sure that all of the business's obligations are finished. If you don't wrap up the sole proprietorship properly, you can be held personally responsible for any remaining debts, taxes or other obligations.

Step 1

Notify your employees of the date you will stop your sole proprietorship, if you are required to do so. Federal laws require that you give your employees 60 days' written notice if you have more than 100 employees. Some states also have their own notice provisions and may require notice for businesses with fewer than 100 employees.

Step 2

Fill any outstanding orders for your business' goods or services. If the business is under contract to do the work, you can be held personally liable if it isn't completed.

Ready to start your LLC? Start an LLC Online Now

Step 3

Cancel any licenses, permits or registrations with your state government that you have for the business. Most states do not require sole proprietorships to register, but many require you to register if you do business under an assumed name.

Step 4

Sell any business assets, such as equipment and office furniture.

Step 5

Pay any known creditors.

Step 6

Notify any suppliers that you are ending your business and tell any insurance carriers that you are closing.

Step 7

Set aside enough money to pay all of your business tax obligations. This includes any outstanding sales, employee withholding and income taxes. Set aside more money in case your business has creditors that you don't remember.

Step 8

File all your taxes with the federal government and your state government at the appropriate time. Keep all of your business records, in case you need them later for a tax audit or other dispute.

Ready to start your LLC? Start an LLC Online Now
Closing a Sole Proprietorship in Tennessee


Related articles

How to Dismantle an LLC

A limited liability company, or LLC, is a business designation that allows its owners, known as members, to maintain limited personal liability for the actions of the company. Dismantling an LLC involves a number of steps that are similar to the process of closing any business entity. Members should review the LLC’s original operating agreement, which typically details the process for dismantling the LLC. If there is no agreement or no such provision exists, it falls to a majority vote of the members to approve the dissolution and to create a timeline for formal closure and dismantling.

Dissolving a Sole Proprietor Type of Business in North Carolina

North Carolina does not require sole proprietorships to register or to obtain a statewide business license. Instead, a sole proprietorship is operated under the name of the owner, and the owner remains personally liable for the debts of the business. Despite the flexibility and ease in creating this particular business entity, when dissolving your business you should follow a number of steps to ensure that there are no outstanding debts or tax obligations.

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.

LLCs, Corporations, Patents, Attorney Help LLCs

Related articles

How to Close a Sole Proprietorship Business in New Jersey

A sole proprietor operates a business alone or as part of a married couple and takes full responsibility for any debts ...

Closing a Sole Proprietorship in GA

Sole proprietorships close for many reasons, including poor economic conditions or simply a change in the owner’s ...

How to Terminate a Sole Proprietorship Business

A sole proprietorship is a business entity owned only by a single individual with no partners. Unlike limited liability ...

How to Form a Sole Proprietorship in Ohio

Many Ohio businesses are formed as sole proprietorships because this type of business is relatively simple to set up, ...

Browse by category
Ready to Begin? GET STARTED