The sole proprietorship business is a simple form of business where an individual simply operates a business on his/her own without forming a complex business entity such as a corporation. To get started, you should consult with a lawyer and accountant to make sure that this form of business is right for you. Once you have made the decision to be a sole proprietor, you will need to take some simple steps.
First and foremost, you will need to determine where your business will be located. You will also need to pick a business name. You can be as creative as you want as long as you do not infringe on anyone else’s trade name. You can also simply do business in your own name (example: “John Smith”). Once you have picked a business address and name, you will need to register your business with the appropriate government agencies.
Registering with the County is the first step. Your County Clerk / Recorder will have a simple form that you will need to fill out to register your business. Forms can usually be found on the County’s website or by going to the County Clerk / Recorder’s office. Every County is different, but most will require you to publish your intent to do business in a local newspaper. After you have properly published your notice in a newspaper you will need to file proof of publication at The County Clerk / Record’s office. The newspaper will usually provide you proof of publication.
Your next step will be to obtain a city business license. This can usually be handled at your local City Hall or City Clerk’s office. Generally there is a form to fill out and a small filing fee. If your City has local taxes, you may also be required to make a tax deposit. While at the City, you should also inquire as to whether or not you need any specific permits to operate your business.
Your third step is to determine if you need to comply with any local taxing laws. For instance, many County’s have county property, sales or income taxes. If you live in such a County, you will need to notify your taxing authorities that you are doing business. Most County tax assessors or treasurers have forms for this purpose.
As for State and Federal taxes, you have a couple of options depending on the size of your operation. If you have no employees and you are just self employed, then you can use your own social security number for tax identification purposes. However, if you are going to hire employees or do business on any large scale, you may want to obtain tax identification numbers (usually referred to as EINs.) You can obtain a Federal tax identification number by visiting the IRS website (http://www.irs.gov) and filling out a form SS-4. To obtain a State tax identification number you will need to contact your State taxing authority. Jump for joy! You are now done with your basic business set-up.