1. Start the BusinessIt's an extremely easy process. The moment you start offering goods and services on your own, you become a sole proprietor, with no additional formalities. The only requirement is that you obtain an Employee Identification Number, but usually you only need one if you start hiring employees or set up a retirement plan. Otherwise you can continue doing business using your Social Security number. Paying taxes is also fairly simple, as you pay them as yourself, since there's no distinction between you and your business.
2. Set It UpKnowing how to start a Sole Proprietorship is only half the battle. For clarity, you will definitely want to run separate accounts and books for your business. You will also have to ensure that you have all the necessary state and local permits and licenses to operate a business of your chosen type. As a self-employed person, you will likely have to spend a fair amount of time and effort on researching the regulations governing your type of business and verifying what exactly you need to do.
3. Make It ThriveRemember: A Sole Proprietorship is a business like any other. To thrive, apart from conforming to all the regulations and paying taxes on time, you will definitely need to set up a proper Business Plan with short and long term goals. Organization is the key, especially when you are your own employer. Make sure to keep tabs on the latest developments in laws governing businesses in your county and state as well, to make sure you respond to changes in a timely manner.
Even though a Sole Proprietorship is the easiest business type to set up, it may not be the best choice when it comes to liability protection and other factors. Learn more about why you may want to consider incorporating.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.