So you want to start a business but you’re not sure if it should be a sole proprietorship or should you go ahead and get a llc. Well in this post I’m going to go over how to set up a sole proprietorship, what a sole proprietorship is and why you should start a business as a sole proprietorship first.
Step 1. Business Name
You should definitely figure out a business name. This is your identity when it comes to doing business. Its your calling card. There a few different ways to come up with a business name that fits your business type. Just Google how to come up with a business name and there will be a bunch of different sites to help.
Step 2. Register Your Business DBA Name
If your going to operate your business under your full name then this doesn’t apply. If your going to use a trade name which most business owners do then you would need to get your DBA “Doing Business As”. Basically Your name is John Williams doing business as The Carpenter Man. Every state is different when it comes to the requirements to file for a DBA. Check with your state government for more info.
Step 3. Buy And Register A Domain Name.
The first start to creating a online presence is having a domain name. This will get you started and make you feel like your business is a “real business”. A domain name is a unique url that is where your website is hosted. Now getting a whole website set up before you complete the
Next steps on the process is not mandatory but if you want to it wouldn’t hurt. Get your hosting a domain name package here
Step 4. Apply For An EIN
Now that you have your DBA registered, the next move would be to get your EIN Employer Identification Number. You will receive an EIN immediately if you file for one on IRS.gov. A EIN number is not required to start a business because the IRS will still use your Social Security number to process taxes if you haven’t employed anyone other than yourself.
You will not be required to obtain a new EIN if you change the name of your business, if you change your location and/or add other locations or if you operate multiple businesses.
Step 5. Obtain Business license And Permits
Your business license and permits all depend on what type of business your are looking to start and run. You would go to your state or county website and search for what licenses and permits you would need to operate locally.
Step 6. Get Business Insurance
Business insurance is a need for any entity that is going to be dealing with people. Having a sole proprietorship is great if you don’t have to hire anyone else but it can be bad because your business liabilities are also personal liabilities.
So to circumvent that issue it might be in your best interest to get business insurance. In business unplanned incidents or accidents happen all the time. Getting General liability insurance can protect you and your business from lawsuits and such.
Step 7. Open A Business Bank Account
It’s not required to have a business bank account is your a sole proprietor but it definitely can help you in the long run. You can keep all your business dealings separated from your personal income. You’ll stay organized when it comes to your business finances. Filing taxes will be much easier and simpler with a business banking account.
Business banking accounts will also help you establish credit and accept credit card payments. Also you might decide to change the form of your business and want to grow your business and having a business bank account will be an important factor if you want to take out a loan or set up a line of credit.
So as you can see setting up a sole proprietorship can be super easy and actually done in a few days. There are a few caveats when it comes to this business formation but in the long run this can be your first step to financial freedom and success.
If you’re interested in setting up business credit or funding the link is in the description.
Until next time Wealthbuilderz
It’s the man it’s the myth the Wealthbuilder himself DeVaughn “Put in Work” Burke signing off for How to set up a sole proprietorship.