Sole Proprietorship- How to start in USA?

Sole Proprietorship- How to start in USA?

A sole proprietor is an exclusive business owner who holds complete control over the business operations and its revenue. At the same time, the sole proprietor is also personally responsible for all the business debts and lawsuits.

Today, over 70% of the business enterprises in the U.S. are owned by sole proprietors. And the main reason is the amount of control and ownership this business model offers. That said, starting a sole proprietorship firm in the U.S. is a fairly simple process. Here, we will look at the various steps involved in the process of starting a sole proprietorship business.

Steps to Start a Sole Proprietorship Business in USA

    1. Make sure a Sole Proprietorship is Right for You

Choosing the right business structure is indispensable to the success of an enterprise. So before you set your mind on starting a sole proprietary firm, you must also consider other business structures. After all, this business structure governs everything, from your daily operations to taxes and liability.

Consider the pros and cons of partnerships, corporations, and limited liability companies (LLCs). Once you have decided on sole proprietorship, it’s time to get in touch with the experts. You must visit your nearest small business development center to understand the legal requirements of running a business.

    2. Register Your Business Name

As per sole proprietorship, your personal name is often the legal name of the business. However, if you wish to operate under a different name, you will have to register a fictitious name, or ‘doing business as’ DBA name.

If you choose a particular name, you must check with the United States Patent and Trademark Office (USPTO) if the name is taken and trademarked. If it is not, you must file your name with USPTO so it is not taken by anyone else.

    3. Choose a Domain Name

If you plan to have your own website, you must purchase a domain name. To ensure a seamless client experience, your domain name should match the name of your business.


If you are not willing to build a website right away, you must purchase or at least reserve your domain name so no one can take it.

    4. Obtain a Business License and Other Permits

The next step to incorporating a business in USA is obtaining a business license to operate the city. This is an important step as operating without a license may cost you steep fines in the future.

Additionally, you need to check with Small Business Development Center if you need any other licenses and permits. For instance, you might require a national license for moving animals, a health department permit for serving food, or a certification exam to operate as a financial consultant. Whatever it is, make sure to complete all the paperwork and get the licenses you need for your sole proprietorship.

    5. Get an Employee Identification Number (EIN)

It is important to understand the relationship between a sole proprietorship and EIN. If you are operating exclusively, you can do without an EIN and file taxes under your social security number (SSN).

But as soon as you hire even a single employee, you will require an EIN. Thankfully, obtaining an EIN is a simple online procedure that can be done without much help.

    6. Open a Business Bank Account

It is advisable to open a business bank account during company registration in USA. It is a significant way to keep your personal and business expenses separate while ensuring a certain level of protection.


You can open a business savings or checking account at almost any bank. Carry your tax ID number, a copy of your business licenses, and DBA certificate while opening the account. Also, it is wise to have a good credit history before starting your business. With that, it is easy to secure a personal loan for your business.

    7. Load Up on Insurance

One of the greatest risks of starting a sole proprietorship business is the amount of liability it comes with. Thus, it is important to have adequate insurance to protect oneself.

It is advisable to get auto insurance, health coverage, property coverage, and disability coverage. Although this may involve spending a lot of money, it will ensure that your personal assets are protected in the long run.

Sometimes, company registration in USA may feel slightly overwhelming. You can take the help of business experts and professional company incorporation services to make the process easier.  

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