Start a Sole Proprietorship in the US: DBA Filing, EIN and Licensing Requirements
Quick Answer
A sole proprietorship is the simplest business structure in the US. To start one, you do not need to register with your state: but you should file a DBA (Doing Business As) if operating under a business name other than your own, get an EIN if hiring employees or opening a business bank account, and obtain any required local business licenses. The main drawback of a sole proprietorship is unlimited personal liability: your personal assets are not protected from business debts. Most business owners with growing revenue consider converting to an LLC for liability protection.
Whether you are starting your first sole proprietorship or need step-by-step guidance on DBA filing and licensing, Brendat walks you through every requirement in any US state.
What Is a Sole Proprietorship?
A sole proprietorship is the simplest and most common business structure in the United States. It is an unincorporated business owned and operated by one person with no legal separation between the owner and the business. No formal state registration is required to start operating, though local filings may apply if you are using a business name other than your own, opening a business bank account, or applying for licenses.
Legal Simplicity
The owner and the business are considered the same entity, keeping things simple and straightforward.
Tax Benefits
Report all profits and losses on your personal tax return; no separate corporate taxes required.
Minimal Paperwork
No corporate formalities or complex filings. Focus on running your business, not administrative tasks.
Easy Setup & Management
Quick to start and simple to maintain, perfect for freelancers, consultants, and small business owners.
While it’s the most common business structure in the US, it’s not always the best fit, especially if you’re looking for liability protection. That’s why we help you explore the pros and cons of sole proprietorship vs LLC in the US before you commit.
How to Register a Sole Proprietorship in the US: 5 Steps
Pick a Business Name
You can use your full legal name or File a DBA (Doing Business As) in the US if you prefer a different brand name.
Learn About DBAsFile DBA (Assumed Name Certificate)
Most counties require this if you’re not operating under your full legal name. We handle the filing for you.
File a DBAApply for a Business License
Depending on your industry and location, sole proprietorship business license in the US is required.
Learn About LicensesGet Your EIN (Optional)
You can use your SSN, but obtaining an EIN is advisable to hire employees & maintain separate finances.
Talk to an ExpertPay Local Taxes and Fees
Even if you don’t owe federal business taxes, you may need to register for sales tax or pay franchise/local fees.
Learn About TaxesSole Proprietorship vs LLC: Key Differences Explained
Choosing the right business structure in the US can make a big difference for liability, taxes, and growth. Whether you’re a freelancer, consultant, or small business owner, understanding the pros and cons of a sole proprietorship versus an LLC in the US will help you start with confidence and protect your personal assets. You can also form an LLC.
| Feature | Sole Proprietorship | LLC |
|---|---|---|
| Liability Protection | Personal and business assets are legally the same, so you’re fully exposed to business debts and liabilities. | Your personal assets are separated from your business, giving you protection from most business liabilities. |
| Business Taxes | Pass-through taxation: profits and losses are reported on your personal tax return, keeping taxes simple. | Offers pass-through taxation or the option to elect S-Corp status, giving flexibility to optimize taxes. |
| Self-Employment Tax | 15.3% on all net profit | 15.3% on salary only if S-Corp elected (LLC saves SE tax above $50K profit) |
| Legal Formation | Minimal setup is required. Just register a DBA if using a business name other than your own. | Requires formal state filing, including Articles of Organization, and compliance with ongoing requirements. |
| Business Name Flexibility | Must register a DBA to operate under a business name, limiting flexibility in some situations. | Registered with the Secretary of State, offering stronger name protection and branding opportunities. |
| Cost to Start | Low, affordable and easy to get started. | Some filing fees and ongoing compliance costs apply. |
| Credibility | Good for solo ventures or low-risk businesses. | Adds professionalism and can increase trust with clients, partners, and investors. |
Sole Proprietorship Taxes: What You Need to Know
As a sole proprietor, all business income flows directly to your personal tax return (Schedule C). You pay:
- Self-employment tax (15.3%) on all net profit
- Federal income tax based on your total taxable income
- State income tax (where applicable)
You can deduct business expenses to reduce taxable income. If your net profit exceeds $50,000 per year, consider converting to an LLC and electing S-Corp status to reduce self-employment tax.
Still Confused Between a Sole Proprietorship or LLC?
Start your business in the US today with Brendat, and get expert guidance to choose the right structure when you’re ready. Simple, Flexible, and Stress-free.
How to Apply for a Sole Proprietorship Online
With Brendat, setting up your sole proprietorship in any U.S. state has never been easier. Our platform guides you step by step so you can launch your business quickly and confidently. We handle everything from DBA name search and filing to EIN application if required, and provide tools for business license lookup and printable formation documents.
Start Your US Sole Proprietorship Formation Today!
Register Online NowDBA Name Search and Filing
We search for available names and file your Assumed Name Certificate with the correct county or state office.
EIN Application (if needed)
We help you apply for an Employer Identification Number when you need one for banking, hiring employees, or separating business finances.
Business license lookup
We identify the federal, state, and local licenses and permits your sole proprietorship may need based on your industry and location.
Printable Documents
Download and keep printable copies of your DBA filings, EIN confirmation, and other key setup documents for your records.
Ongoing Compliance Support
Get reminders and guidance for DBA renewals, license deadlines, and other compliance requirements so your business stays in good standing.
Frequently asked questions
Is a sole proprietorship a legal entity in the US?
No. A sole proprietorship is not a separate legal entity. You and your business are considered the same for legal and tax purposes.
How do I register a sole proprietorship in the US?
We can help get you started today.
Can I run a sole proprietorship from home?
Yes. Most sole proprietorships can be run from home. You may need a home occupation permit from your local city or county depending on your industry and local zoning laws. Check with your local municipality before starting.
Can I switch from a sole proprietorship to an LLC later?
Yes. Converting from a sole proprietorship to an LLC is straightforward. You file Articles of Organization in your state, transfer your business assets to the LLC, update your EIN if you have employees, and open a new business bank account. Brendat handles the full conversion process.
Do I need an EIN for my sole proprietorship in the US?
Not always. If you are a sole proprietor with no employees, you can use your Social Security Number (SSN) for taxes. However, an EIN is recommended if you plan to open a business bank account, hire employees, or want to keep personal and business finances separate. An EIN is free from the IRS.
What’s the difference between an LLC and a sole proprietorship?
A sole proprietorship has no legal separation between you and the business, so your personal assets are exposed to business debts. An LLC is a separate legal entity that can protect personal assets, with more formal formation and ongoing compliance. Many owners start as a sole proprietorship and convert to an LLC as they grow.
Questions?
Get expert support for formation and compliance questions.
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