You become a sole proprietor in a legal sense anytime you go into business for yourself. This page outlines the steps you need to take in order to make sure that your sole proprietorship is in compliance with applicable laws. Make sure to consult your state page for state-specific details.
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 register the name as a "fictitious" or "assumed" business name (sometimes also called a "trade name" or a "doing business as" filing). In most states, you do this at the local level by registering with the county clerk's office in the county where the business is located. In other states, you may have to register with the Secretary of State or another state agency in addition to registering at the local level. For more on the requirements of state law, see the state pages on forming a sole proprietorship. Fees and procedures may vary from location to location, so you should contact your county clerk's office for specifics.
- 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.
- As a business doing journalism, you are not required to obtain any federal or state licenses or permits relating to carrying on a particular trade. Most local or city governments, however, require every business to obtain a basic business license, sometimes called a tax registration certificate. You get this license from your city or county. The best way to get information about fees and procedures is to contact your county or city clerk's office or other local government authority. The local chamber of commerce and other small business owners might also be a good resource for information regarding local licenses and/or permits.
4. Determine what tax 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 Employer Identification Number (EIN) from the IRS. There is no filing fee. You can apply for an EIN:
- by submitting the required information online at the IRS's website. The EIN is issued immediately once the application information is validated;
- by telephone at 1-800-829-4933 from 7:00 a.m. to 10:00 p.m. in your local time zone; or
- by mailing or faxing Form SS-4, Application for Employer Identification Number. Instructions for Form SS-4 are available on the IRS website.
- If you have an employee or employees, you likely will need to obtain a state employer identification number or account for tax purposes. You will also have to report any new hires as you make them. See the State Law: Forming a Sole Proprietorship section for details on state requirements.
- As the owner of a small business, you are subject to additional federal and state taxes and informational filing requirements, such as self-employment taxes and employment withholdings and filings. Please see the Tax Obligations of Small Businesses section for details.
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, a copy of your business name filing document, and your local business license, although you may not need any documentation if your business's name includes your surname. Here is an example of what banks may require.