What to Know When Applying for a Sole Proprietorship
So you’ve decided to start your own company and operate as a sole proprietorship–congratulations! Thankfully, setting up a sole proprietorship is pretty easy. Technically, you don’t need to do anything other than begin conducting business as a sole business owner to become a sole proprietor. However, there are many other things you should do if you want your business to be compliant, protected, and successful. Here are some important things to keep in mind when starting your sole proprietorship.
You Should Get An Employer Identification Number (EIN)
The IRS doesn’t require you to have an EIN to start your sole proprietorship, but it’s useful and necessary for many business activities you’ll want to pursue. Here are some circumstances in which an EIN is required:
- Opening a sole proprietor bank account
- Applying for a company credit card
- Hiring employees
- Having certain retirement plans, such as a Solo 401(k) or Keogh
Additionally, an EIN helps protect your identity because you won’t have to use your Social Security Number for business purposes. You can obtain an EIN number easily online here: https://www.govdocfiling.com/
You Should Obtain Permits and Licenses
Local, state, and federal government agencies may require you to have certain permits and licenses to operate your sole proprietorship. If you don’t get the licenses you need, you could get dinged with hefty penalties. Applying for and renewing your license is a cost-effective way to remain compliant.
You May Need a Fictitious Business Name
By default, your business name will be your own name. However, you may want to conduct business under a different name. If this is the case, you’ll need to register a doing business as (DBA) or fictitious business name (FBN) at the county or state level.
Gov Doc Filing can help you start your sole proprietorshipby giving you a tax ID number from the IRS.