Dissolving a Sole Proprietorship
A sole proprietorship is the most common business form because it is simple to establish and easy to maintain. For the same reasons that it is easy to start a sole proprietorship, and dissolving a sole proprietorship is relatively simple as well. If you own your own business and run it as a sole proprietorship, you can close your business in a few simple steps.
Because only one person can own a sole proprietorship, dissolving one is relatively simple. For example, there is no need to consult other partners or obtain a majority vote to dissolve the sole proprietorship. A sole proprietor, however, will have to notify any individuals with whom he or she has outstanding contracts, including rental and vendor agreements. It is also a best practice to notify all clients of your plans to close your business.
Because there is no separate legal entity with a sole proprietorship, entity organization documents do not have to be filed with the Secretary of State, and therefore the State does not have to be notified upon dissolving a sole proprietorship. However, depending on the business of the sole proprietorship, a business license may have been required. If that is the case, the business owner will want to cancel the license and notify the proper issuing authority.
The same is true for any permit associated with a “doing business as” (DBA) or fictitious business name. If the sole proprietorship did business using a name different from that of the sole proprietor, a Fictitious Business Name Statement should have been filed. It would be prudent for the owner to contact the local or state office where the statement was filed and inform them that you are dissolving a sole proprietorship.
The finals steps to dissolving a sole proprietorship will be to close any business bank accounts. Bank and credit card accounts in the business’ name are the last thing that evidence the existence of a sole proprietorship, and continued use may suggest the business is still in operation.
If you have any questions about closing your business, including dissolving a sole proprietorship, consult with an experienced attorney. Ezer Williamson Law provides a wide range of both transactional and litigation services to individuals and businesses. We have successfully prosecuted and defended various types of business, contract, and property claims. Contact us to see how we can help you with your business law needs.