1. Choose a business name for your sole proprietorship and check for availability.
- Please see our section on choosing and checking the availability of a name for your small business, as well as our section on the trademark law aspects of choosing a name.
2. Register the business name with local, state, and/or federal authorities.
- If you will be operating your sole proprietorship under a name that is different from your own name, then you will need to obtaini a "dba certificate" at the city or town hall in the area where the business will be located.
- Although you are not required to do so, you should consider registering your business name as a federal and/or state trademark. Please see the Trademark for Business Naming section for details.
3. Obtain any required local licenses.
- Please see the general section for details.
4. Determine what tax and other regulatory obligations your sole proprietorship has, and take care of any necessary registrations.
- If you have an employee or employees, you need to apply for an Employment Identification Number from the IRS. You can apply for an EIN online. You may apply for an EIN even if you have no employees. Doing so may make it easier to open a bank account and reduce your risk of identity theft. There is no filing fee.
- If you have an employee or employees in Massachusetts, you will need to register for Massachusetts withholding-payroll taxes using the Massachusetts Department of Revenue business registration page. If you have questions about business taxes, the Massachusetts Department of Revenue has many publications that should be able to answer your questions. The Guide to Employer Tax Obligations is especially useful.
- Whenever you hire an employee in Massachusetts, you must inform both the IRS and the Commonwealth of Massachusetts. You can find details of all the necessary steps, including verifying work eligibility and withholding allowances, on the Hiring Employees section of the IRS website. You can find state-level information on reporting new hires at the Massachusetts New Hire Reporting Center website.
- If you have employees in Massachusetts, you must carry workers' compensation insurance. The Department of Industrial Accidents administers this program.
- As a business owner or employer, there may be other informational returns that you have to file annually or semi-annually with the IRS. For more information, take a look at the IRS Guide To Information Returns.
5. Open a bank account for your business.
- It is a good idea to keep your business's finances separate from your personal accounts. A good way to do this early on is by opening a bank account for your business. The bank will probably require your Social Security Number or EIN and a copy of your business name filing, although you may not need any documentation if your business's name includes your surname. (Here is an example of what banks may require.)