Are you wondering if you can sell a sole proprietorship? This article will answer that question by discussing the steps involved in selling a sole proprietorship and the legal requirements of selling a sole proprietorship, as well as what assets can and cannot be sold.

Can You Sell A Sole Proprietorship?

The answer is yes. You can sell a sole proprietorship, but not in the same way that you would sell a corporation or LLC. Since a sole proprietorship is not a legal entity separate from the owner, it can only be sold by selling the business assets.

Steps in Selling a Sole Proprietorship

  • Determine the selling price. Estimate the total value of the business based on forward earnings.
  • Find a buyer. Retain a business broker to help you find a buyer and help you negotiate the best price.
  • Sign a purchase agreement. Draft a purchase agreement that outlines the terms and conditions of the sale.
  • Transfer the assets. Transfer the business assets to the buyer.

Legal Requirements of Selling a Sole Proprietorship

Unlike a corporation, there are very few legal requirements to create or sell a sole proprietorship. By design, a sole proprietorship can never have more than one owner. It is important to note that the sale of a sole proprietorship is not the sale of stock like you would see in a corporation, nor is it the sale of partnership interest like in most LLCs.

Assets You Can Sell

When selling a sole proprietorship, you are not selling the business itself, but instead a collection of the owner’s tangible and intangible assets. These assets could include intellectual property, such as copyrights, trademarks, and patents; business equipment, such as computers and furniture; and customer or client relationships.

Conclusion

So can you sell your sole proprietorship? Yes, you can. You can sell the assets of a sole proprietorship, but not the business itself. If you need help selling a sole proprietorship, Atlantabusinesses.com is a great resource for answers to all your questions about selling a business and about business brokers.

What makes it difficult to market a single proprietorship?

A sole proprietorship is intended to be owned by a single individual, so when that person passes away or the business is sold, the structure will no longer exist. It is not possible to transfer a sole proprietorship to another person.

Can the ownership of a sole proprietorship be easily transferred?

A sole proprietorship cannot be transferred to a different person, since the individual who owns the business is personally responsible for all of the business’s debts. However, if an estate is owned jointly, it is possible for the proprietorship to switch owners.

What are the financial consequences of selling a business owned by one person?

When you get money from selling assets of your individual business, you need to make sure that you accurately record the profits and pay capital gains taxes ranging from 15 to 28 percent. This necessitates keeping detailed financial records in order to make sure all applicable taxes are paid.

How difficult is it to shut down a single proprietorship?

A sole proprietor needs to write a letter to the IRS that contains their business’s full legal name, Employer Identification Number (EIN), address, and the purpose of why they want to terminate their account.