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How to Start (and Keep) a Sole Proprietorship: 

Formation and Other Required Formalities: 6 Steps

1. Name:
If you wish to use a business name other than your own name, you must generally register that name with the local, state, or county agency that handles assumed/fictitious business name registrations.  Assumed name registrations must be renewed, so keep track of and comply with requirements.

For clear identification, and to avoid infringing others’ legal rights, you will likely want to select a unique name.  Attempt to determine whether your chosen business name is already being used by doing a general online search, searching your local fictitious or assumed name database, searching state and federal trademark databases, and searching your state’s limited partnership, corporation, and limited liability company databases.  A domain name search may also be helpful.

If desired, you may also register your business name as a state or federal trademark.  This is a good idea, but not a requirement.

2. State Formation Filings:
You generally should not have to file state forms to create a sole proprietorship, but confirm this with your Secretary of State.

3. Licenses:
You must determine whether your business requires any licenses.  You can generally search for this information online or at your local library, contact your local or state government for more information, or seek help from a local business attorney.  Perform a search regarding licenses related to your location and industry.  Follow all rules and procedures.

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4. Other Regulatory Requirements:
You must determine whether you have other compliance obligations.  Search state and federal business databases for information, and comply with all applicable rules, regulations, and procedures.  For example, your business may be subject to environmental laws, federal import or export laws, state labor laws and workers’ compensation laws, or laws specific to your industry or endeavors.

5. Federal Tax Registration
If you will have employees, apply for your federal EIN. [1] If you will not have employees you should not need to register your business or obtain a separate tax ID number.  Consult your local accountant in this regard.

6. State Tax Registration:
If required by your state, register your business with your state revenue department, and obtain any necessary state tax identification numbers.  Your state may require additional registration actions upon the hiring of any employees.  Consult your applicable rules.

Post-Formation Requirements

Annual State Business Filings:
There are generally no annual state business reports to file or entity fees to pay.

Required Internal Formalities:
There are generally no annual internal governance requirements.


[1] http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Apply-for-an-Employer-Identification-Number-(EIN)-Online.