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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."

Learn about DBAs

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.

Learn about business licenses

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.

Learn about LLCs

Legal Advice

Running a business can be complicated. Once you join our Business Advisory Plan, you can get attorney advice for your immediate legal needs as well as help prevent future issues.

Learn about Business Advisory Plan

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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This public forum is not intended to provide legal advice and is not a substitute for professional legal advice. Unless specifically indicated, the content is not drafted, supported, or vetted by LegalZoom. It is simply a place for customers to help customers. If you need legal advice, LegalZoom can connect you to a licensed and independent attorney. If you are providing answers, please do not provide legal advice if you are not qualified or licensed to do so.

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