Exit Strategy: 10 Steps
- Plan closure in advance
- Discuss strategy with partners
- Announce intent to dissolve
- File articles of dissolution
- Notify IRS within 30 days
- Admit it’s time to close
- Follow required process
- Protect assets and credit
- Clearly notify stakeholders
- Prevent lawsuits
Closing a Business Properly
First, formally agree to close. For a corporation, hold a Board meeting. Take an official vote recorded in minutes. Get majority shareholder approval. Without enough votes, you likely can’t dissolve. Closing a business takes weeks or months. With a plan and checklist, the process is easier.
Steps to Close a Sole Proprietorship
- Cancel business licenses
- Inform contractors and terminate contracts
- Settle remaining debts and obligations
- File final tax returns
- Notify relevant authorities
- Cancel permits and registrations
- Retain records
Closing a Sole Proprietorship in California
When you decide to close a business you must legally terminate its existence as an independent business entity in California. To formally close a sole proprietorship in California, you must cancel business licenses and inform contractors to terminate contracts.
Key Points for Closing a Sole Proprietorship
A sole proprietorship is owned by one person. To close it: settle debts; cancel licenses; close accounts; keep records. Since there is no formal structure, dissolving a sole proprietorship is straightforward. However, properly closing accounts and debts is critical to avoid issues. Consultants can provide guidance tailored to your situation when shutting down.
Closing a Sole Proprietorship Business Account with IRS
To close their IRS business account, a sole proprietor needs to send the IRS a letter that includes the complete legal name of their business, the EIN, the business address and the reason they wish to close their account.