How Do I Close a Sole Proprietorship in Maryland?

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Steps for Closing a Business Properly

Develop an exit strategy with ten steps:

  1. Plan closure in advance
  2. Discuss strategy with partners
  3. Announce intent to dissolve
  4. File articles of dissolution
  5. Notify IRS within 30 days
  6. Admit it’s time to close
  7. Follow required process
  8. Protect assets and credit
  9. Clearly notify stakeholders
  10. Prevent lawsuits

Important Considerations When Closing a Business

Closing a business takes weeks or months. With a plan and checklist, the process is easier. 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.

You must notify stakeholders to prevent lawsuits. Protect assets and credit. Tie up loose ends over months. Closing quickly leaves problems.

IRS Requirements for Closing a Business

You must file a final tax return when you close your company. The filing notifies the IRS your business closed. Requirements and deadlines depend on the company type. For example, a sole proprietorship files a Schedule C with personal taxes.

The IRS has steps when closing a business: File a final return and related forms. The type of return depends on the business. Take care of employees.

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