Final answer:
To dissolve a sole proprietorship, the only legal requirement is the owner's decision to close the business. This choice involves addressing all debts and legal obligations, as the sole proprietor is responsible for all aspects of the business.
Step-by-step explanation:
The only legal condition to dissolving a sole proprietorship is the decision of the sole proprietor to cease business operations. Because the business and the owner are legally considered the same entity, the sole proprietor has the right to dissolve the business at any time.
As the sole proprietor is personally responsible for all debts and obligations, ceasing operations would involve satisfying or appropriately dealing with these responsibilities. The proprietor must ensure all the business's financial affairs are in order including paying off debts, selling off inventory, and taking care of any legal obligations such as contracts or taxes owed. If these are managed properly, the owner can discontinue the business without any legal hindrance.
Incorporation offers an alternative for those seeking to mitigate the risks associated with personal liability by creating a separate legal entity. However, in a sole proprietorship, all profits and liabilities rest solely with the owner.