As we were saying last time, businesses come in several different configurations or flavors, if you please. There are differences between corporations, limited liability corporations, general partnerships, limited liability partnerships and sole proprietorships. Some of us, when we are dreaming of being in business for ourselves, do not envision things like partners or employees. We are “solopreneurs”, otherwise known as sole owners/sole proprietors–start ups with no intention to get “big”.
A very popular name on the internet, Legal Zoom, explains sole proprietors like this:
“Although the simplest form of business, sole proprietorship are not considered a separate legal entity and do not offer owners limited liability protection. If you intend to do business under a name other than a legal name, you will need to file a DBA.”
Sliding into a sole proprietorship is easier than falling in love. You could declare yourself in business today. The drawback is that all personal assets are considered to be the assets of the business. In that case the business is naked in the face of any law suit–no protection of personal assets at all–sole proprietors take on the risk of losing all assets should there be a suit.
You may open for business under your own personal name and use your own tax ID (social security number) when you identify yourself to the IRS…and you do have to let the IRS and the world know don’t you? In the case that you want to actually develop a distinct business personality and not use your own name as the business’ name, you may want to establish a DBA (doing business as) and get an EIN (Employer Identification Number) as a taxpayer number. Every state in the union has a different twist on this, so be sure you know and understand what the process is in the state –or in the province of the country where you live. You are actually beginning to develop a Brand Name. In that case, it would be worth your time to go to a site like Direct Incorporation and see if the business name you think of is distinctive enough. Doing the name search would prevent any other business from suing you for brand name infringement.
Since a new business will need an online presence there should be an invitation to dance with a hosting site–your business’ internet home–and check to see if there is another website with your chosen business name. Personally, I would look for a website name first so that the website and the business name will match exactly.
- What is the Sole proprietorship? (infotaxsquare.wordpress.com)
- Should You Run Your One-Person Business as a Sole Proprietorship? (elizabethpottsweinstein.com)
- What is Assumed Name? (infotaxsquare.wordpress.com)
- LLC Tax Filing Rules (turbotax.intuit.com)
- Personal vs. Professional Credit – What Every Business Owner Should Know (lexingtonlaw.com)
- Legal Structure &DBA (thomascattron.wordpress.com)
- Should I Register as a Sole Proprietor? (upandrunning.bplans.com)
- Limited Liability Company Taxes (turbotax.intuit.com)
- The Different Types Of Businesses And The Key To Profit (50plusfinance.com)
- What is a Schedule C IRS form? (turbotax.intuit.com)