Business

How to Start a Sole Proprietorship

Want to know what a sole proprietorship is? You never know, it may be a perfect fit for you in the business world. Here’s how to start a sole proprietorship.

What is it?

Let’s start off by telling you what sole proprietorship is. It is a type of business structure that has a shared identity. The business is not a separate legal entity. Since you are the owner, you take all legal responsibility if your business is faced with financial troubles.

How to Start a Sole Proprietorship

1. Change Your Business Title

Think of a separate business name. If you are going to be a sole proprietor you need your own name. You are legally required to use a personal name. If you want to use a different name then you have to file an application with the state. Upon choosing a different name, make sure that nobody else has this name.

2. Get an Employer Identification Number

You will need to acquire a federal employer identification number as the sole proprietor. The IRS uses it to identify companies when taxes are paid. Banks also require an EIN for a business bank account.

3. Open a Business Bank Account

Speaking of bank accounts, it is important to open a bank account that is separate from your own. Separate business money from personal assets. And some banks require an EIN to open a business bank account.

4. Secure Proper Paperwork from your State

It is very important to sign all the needed paperwork from the state before you open your business. Depending on which industry you work in (i.e. chef, writer, accountant) you may need certain business licenses, permits, or zoning clearance. Check the requirements of the states so that your business remains compliant with laws and regulations.

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