Sole Proprietorship Information

 A sole proprietor is a person that does business as himself.  Like other businesses, such as a partnership or an LLC,  a sole proprietor needs to have a license to do business  and may use an fictitious business name.  Thus, if the sole owner is Joe Jones and he is doing business as "Master of Disaster," that name would be his doing as business name and he would have to file an assumed business name DBA.

The sole proprietor's business assets may be sold to anyone almost at anytime  transfering the the business  to the buyer as a new owner.

Disadvantages of Sole Proprietorship

The main disadvantage of being a sole proprietor is that you are liable for business debts and you don't have as much prestige as if you were an LLC or corporation. Also, even sole owners  may have to comply with business registration, business license, or permit laws to make the operation legal.  

When the owner of the business dies, his legal successors can continue with the business unlike other type of entities.   There are costs to forming or maintaining a sole proprietorship such as obtaining a business license and fictitious name, if needed.

Advantages of Sole Proprietorship
 

Low cost of start up.  You only have to pay for a business license, an assumed name and if you are an independent contractor, get a federal tax id number.

Examples

First example:  John is painting houses as a sole owner.  He has employees.  One of the employees falls from a ladder and breaks his legs.  John has no insurance for his business and the employee sues him personally and takes his house and  car for compensation because John had not enough cash to compensate him.

Second example:  John is a delivery driver for himself.  He contracts to deliver goods for others.  One day he has an accident and a pedestrian is hurt.  Pedestrian breaks 5 ribs and sues John for everything he has.  John loses everything. 

Simply follow the procedures of submitting your business information on this site and we will get your licenses and tax ids for you.

1. Submit an online form
2. Pay for our service
3. Receive your form.

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In addition to getting licenses, a sole owner must pay taxes on  Income

A sole owner needs to report all business income or losses on his or her individual income tax return -- IRS Form 1040, with Schedule C attached.  A sole proprietor must  withhold and pay employment  taxes for his employees.  That requires both a federal tax id and a state employer id.  In addition, a sole proprietor must pay self employment taxes.   

How to Register a Sole Proprietorship

The first registration should be a trade name registration.  That allows a sole owner to open a business bank account in the name of the business.   Then a business license or tax registration certificate is required.  If you have employees, obtain an employer identification number, a seller's license, if you will need to sell taxable items and collect taxes, and in some cases a home occupation license and zoning permit.

Sole propriers must register their business because if they fail to do so, they may be subject to back taxes and other penalties.

Prices range from $5 to $399 depending on your business application procedure and form.  www.businessnameusa.com