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Sole proprietorships are often the results of accidental entrepreneurs and new business owners beginning a business without really intending to start a company. As soon as your enterprise has revenue, it’s a business. With a sole proprietorship, there is no state filing to begin the business. On the flip side, there is no separation between the assets of the business and those of the owner. Therefore the sole proprietor‘s personal assets can be used to satisfy business debts and liabilities.
Typical advantages of a sole proprietorship include:
Sole proprietorships do not face the same ongoing formalities and requirements that corporations or LLCs face. There are no annual reports to file with and fees to pay to the state, no required annual meetings, etc. However, depending on the type of business, as a sole proprietor, you will still need business licenses and permits.
As a sole proprietor, unless you file a DBA (doing business as) your company name will be your personal name. In order to open a bank account, most banks require sole proprietors to have a DBA name. You may also find that potential customers and vendors feel your business is more legitimate with a DBA name.
Since regulations differ across state and local jurisdictions, the registrations required for your business are unique depending on the location and your business operations. However, payroll tax and sales tax are common registrations for businesses in many state and local jurisdictions.
The following Learning Center materials can help you learn more about sole proprietorships and other business types:
The following products/services are often required by sole proprietorships:
We have resources to help you understand your options.
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