Sole Proprietorship

You've gone into business for yourself. But that doesn't mean you're all alone.

You don't need to file paperwork to start a sole proprietorship. But there are some things you may want to consider to get the most out of your business.

Jae Kim
LegalZoom customer

Is a sole proprietorship right for you?

If you're in business for yourself and you haven't created a formal business structure, then chances are,
you're already a sole proprietor–so make sure you understand the implications.

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Sole proprietors are personally liable for the debts of their business. If the business is sued, your house, savings, and other personal assets are at risk.

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A sole proprietor is responsible to report all business profits as personal income, and pay self-employment tax on those profits, to cover Social Security and Medicare.

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Hard to Raise Capital

There are no partners, shares, or membership interests in a sole proprietorship so it's generally difficult to attract investors without changing your business structure.

So you're open for business. What next?

A sole proprietorship is simple to start, but that doesn't mean you should let your guard down.
A little preparation goes a long way.


If you're a sole proprietor, the legal name of your business is your own name. In most states, if you want to operate the business under a different name, you'll need to file for a DBA, "doing business as."

Business Licenses

You may need state or local permits and/or licenses to legally operate your business. We can help you figure out the business licenses you need.

Limit your liability

As a sole proprietor, you'll be personally liable for your business's debts and other liabilities. You may want to consider operating as a limited liability company (LLC) instead, so you're better protected.

Tax Advice

Business taxes can be complicated. Once you join our Business Advantage Pro legal plan, our partners at 1-800-Accountants can help you prepare and file your tax forms correctly and on time.

Ask away. We have answers.

Common Questions

Do I need to use my own name for my sole proprietorship, or can I run the business under another name?
As a sole proprietor, by default, the legal name of your business is your own name. But you can choose operate the business under another name, known as a "fictitious business name" or "doing business as" (DBA). Most states require you to file an application for your DBA.

We can help get you started today.
Do I need to register my sole proprietorship with the government?
You don't have to register or file any paperwork with the federal government to form a sole proprietorship. If you go into business without setting up another business structure and if you're the sole owner, then you're automatically considered a sole proprietor.

However, some states and counties may require you to obtain business licenses and/or permits before you can lawfully operate, Also, if you want your business to have a name that's different from your own legal name, then most states will require you to file for a DBA.

Learn more about sole proprietorships and how they compare to more formal business structures.
Can I open a business bank account with a sole proprietorship?
Even if your business is a sole proprietorship, you should have a separate business bank account to help separate your business and personal income and expenses. This will help you properly report your business income on your personal tax returns. Most banks will allow you to open an account for your sole proprietorship using your social security number.

If you plan on doing business under a fictitious name ("DBA"), most banks will require proof of the filed DBA before they will open the account.

See also: Can I conduct business and open a bank account before my DBA has been filed?
If my business grows, can I change my sole proprietorship into a corporation or LLC?
You can always choose to restructure your business. Whenever you decide your business might be outgrowing its status as a sole proprietorship–whether you're looking to take on partners or investors, or you want the benefit of different tax options and liability protection–we have resources to help you find the business structure that's right for you.

Learn more about the advantages of corporations and LLCs.

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Start a Sole Proprietorship and File a DBA Name Online with LegalZoom

If you want to run a business on your own you can start with a sole proprietorship. A sole proprietorship is a one-person business that is not registered with the state as a separate business entity.  One of the advantages of sole proprietorship is that it is easy to set up and maintain. There generally aren't any special forms or fees to pay to start working as a sole proprietor. The only thing you need to do is state that your business is a sole proprietorship when you complete the general registration requirements that apply to all new businesses.  When you set up a sole proprietorship business, you'll need to file a DBA (doing business as), also known as a fictitious business name, if you want to use a company name other than your legal name.  Filing a DBA will allow you to legally conduct business using that business name and gain valuable rights. With a DBA, you can also open a bank account under the business name.  File a DBA for your sole proprietorship online quickly and easily with LegalZoom. Simply answer a few questions to get started. We complete, file and publish (if required) your DBA application and mail the approved application to you 

Jae Kim is an actual customer, compensated for his time.

*Available in most states. After the 30-day trial period, benefits to the Business Legal Plan (also Business Advantage Pro) continue automatically for $29.99 per month. For states where Business Advantage Pro is not available, benefits to Business Advantage Standard continue automatically for $7.99. You can cancel by calling (877) 818-8787. For full details, see the Legal Plan Contract and Advantage Terms of Service.

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