You don't have to report to the IRS that you closed your business in 2016, unless you sold the business or disposed of assets. Examine Schedule
C and you'll see that there is no place to check that you closed your business.The IRS will automatically consider your business closed if you don't file another Schedule C for that business. If you decide to start a sole proprietorship up again, there is no paperwork required by the IRS. Simply file a new Schedule C for the year you started up again. For this reason, a sole proprietorship is the easiest business entity to form and to dissolve.
TurboTax asks you if you closed your business only to prompt you to enter any taxable sales for the year that you closed the business.
Since the business was closed in 2016, don't report a zero Schedule C for 2017.
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