by Linda Sorcie Smith

Created on: January 11, 2008   Last Updated: June 13, 2009

A sole proprietorship, or business owned by one individual, can come to an end in several ways. It can simply be closed, it can be sold or, in case of death, the business assets can be transferred to heirs.

Whichever the circumstance, the sole proprietorship is the easiest form of business to end. The business owner simply stops conducting business. There are no dissolution papers or complicated legal forms to be filed, but a few letters are needed.

If employees are involved, or if sales tax is collected, your state's department of revenue should be notified in writing that the business is no longer conducting business. Your state's web site should contain the appropriate forms and procedures. If any trade names have been registered, you should write a letter to the secretary of state for discontinuation of that trade name. The local tax office should also be made aware that you are ending your business.

Out of courtesy to your customers, you should notify them ahead of time, filling all orders on hand and declining further orders. Final payments to your suppliers should settle any outstanding balances and advise them of your decision to close.

If you choose, instead, to sell the assets of your business, you should decide whether you would sell the name of the business, as well as the telephone number, along with the inventory and equipment. Any loans with your name should be paid off, and all other bills should be taken out of your name. Another wise move is to notify customers and suppliers that the business has changed hands.

Whether closing or selling, its important to plan for end of the year taxes with good recordkeeping.

In the case of your death, your surviving heirs will inherit the assets of the business, but they are not required to keep the business operating.

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