How to End a Sole Proprietorship
Sole proprietorships are businesses with only a single owner that have not been incorporated or formed into some other business structure such as a limited liability company. A sole proprietorship lasts as long as the owner wishes it to; it can even last beyond the owner's death if the owner bequests the business to another willing manager. With this in mind, sole proprietorships can be ended by simply closing up shop and ceasing future business. Nonetheless, you should take a few extra steps to fully end your endeavor.
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Things You'll Need
- Letter discontinuing trade name
- Notice to state tax authority and licensing entity
Instructions
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Discontinue your trade name. Most states require that you send a notice to your Secretary of State that you are discontinuing the use of your trade name. If you operated your sole proprietorship under a trade name--a name other than your legal name--then you need to send a notice indicating that you are no longer operating under that name. List the date you intend to stop doing business under the trade name.
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Send a notice to your tax authority indicating you are closing your sole proprietorship. The notice should include your name, address, and a statement indicating you are closing your business along with the date you intend to stop doing business.
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Post a "Going Out of Business" notice in your business' window. Publish a notice that you are ceasing business in a newspaper of regular circulation in your area.
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Pay any outstanding debts and finish orders that were made prior to your decision to close the business. Send contract termination letters when you finish the orders. A contract termination order is a simple letter that details the transactions, explains how you complied with the terms of the transactions, and clearly indicates that the contractual relationship is over.
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Contact any creditors, vendors, and suppliers to inform them that you are closing up shop. Creditors, vendors, and suppliers are people such as your accountants, people that supplied you with inventory or supplies, and people such as your insurance carriers and any of your lenders. Do not take future orders. After the date listed in your notices, simply cease doing business.
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Conduct a "going out of business" sale to liquidate any assets you do not wish to keep from your business. The remainder of your assets from the business can either be kept or donated.
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References
- Photo Credit business is business - cliche image by Jeffrey Zalesny from Fotolia.com
