Closing down a sole proprietorship – how the process works

22.5.2026

Sometimes plans change, and it becomes time to close down a business and officially end a sole proprietorship. The process often involves more practical steps than people first expect. Together with Business Advisor Antti Alasaari, we went through the most important things to keep in mind.

A sole proprietorship is the most common type of business in Finland. It’s popular because it’s relatively easy to start and works well for small businesses, part-time entrepreneurship and solo entrepreneurs.

There can be many reasons for closing down a business

Closing down a sole proprietorship doesn’t always mean that the business has failed. For many people, it’s simply a natural part of working life and entrepreneurship.

"Many people run a business alongside work or studies, and life situations can change. In some cases, when the business grows, the entrepreneur may want to switch to another type of business structure", says Antti Alasaari.

It can also be about retirement, changing careers or simply that the business has come to an end in its current form.

How does the process work in practice?

When closing down a sole proprietorship, the entrepreneur must submit a termination notice through the ytj.fi service. At the same time, it’s important to make sure that all practical and financial matters are taken care of.

Remember, for example, to:

cancel VAT registration and tax prepayments
submit the final tax return
cancel insurance policies and agreements
store accounting records and receipts for the legally required time
sell or clear out inventory and materials

"What people most often forget is usually some small practical detail, such as insurance policies or subscriptions that are still active", says Alasaari.

Common questions and misunderstandings

Because a sole proprietorship and the entrepreneur are legally considered the same person, the process can sometimes feel simpler than closing down other types of companies. At the same time, there are still details that are important to check in advance.

"One thing that sometimes surprises entrepreneurs is that company assets must be valued when the business closes down. If the entrepreneur wants to keep, for example, a car or work equipment that has been used in the business, the assets first need to be valued at market price and transferred out of the business for private use. This also affects taxation", Alasaari explains.

It’s also important to remember that accounting materials and documents must still be stored for the legally required period even after the business has closed.

It’s worth asking for help

Once you start looking into everything involved in closing down a sole proprietorship, the process can feel overwhelming. That’s why we recommend booking a business advisory appointment if the process or the next steps feel unclear.

"We usually go through the entire process together with the entrepreneur. What notifications need to be submitted, in what order the different stages happen and which authorities need to be contacted", says Alasaari.

During the meeting, topics such as taxation, accounting, insurance and company assets can also be discussed. The goal is to help the entrepreneur get a clear overview of the process and feel more confident moving forward.

"The situation often feels much easier once the process can be divided into concrete steps together with someone else", Alasaari says.