Sole Proprietorship Setup

What is a Sole Proprietorship?

A sole proprietorship is the simplest business structure · a single owner conducting business in their own name or under a registered "doing business as" (DBA) name. Sole proprietorships have no separate legal entity. The owner reports business income on their personal tax return (Schedule C) and has unlimited personal liability for business debts.

When sole proprietorship is the right structure

• You operate a side business or freelance practice with minimal liability risk
• You're testing a business idea before forming an LLC
• You have no employees and no plans to hire
• You don't carry significant business debt or contracts
• You want the simplest possible tax filing (Schedule C)

When to upgrade to an LLC

• Annual profit consistently above $40,000 (S-Corp election becomes useful)
• You hire any employee or contractor
• You sign contracts in the business name
• You take on inventory, real estate, or business loans
• You want to separate personal and business assets for liability protection

What's included

• DBA / Fictitious Business Name registration (where applicable to operate under a trade name)
• EIN application with the IRS (optional but recommended for banking and contracts)
• Business bank account opening guidance with our partner banks
• Sales tax permit registration in your state
• Business license research and filing for your locality
• Self-employment tax + estimated quarterly tax filing guidance for Schedule C filers

A sole proprietorship does NOT require state entity formation · there's no Articles of Organization to file. The "setup" is registering the DBA (if using a trade name), getting an EIN, opening a business bank account, and registering for any state-required permits.

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