Checklist: Starting a Sole Proprietorship

Starting a sole proprietorship is relatively easy, but you want to make sure you do it both properly and effectively. The following checklist highlights the main steps in starting a sole proprietorship. Keep in mind that your own start-up requirements might vary from the list below, depending on the specific type of business you are in, where your business is located, and other factors.

__1. Decide on a Business Name

Your business name can have a significant impact on branding and marketing, although many sole proprietors simply do business as themselves. The name of your business can be your own personal name or a "fictitious" business name (also called a "DBA," which stands for "doing business as."

There's no need to rush the process, and it's suggested that you choose more than one possible business names and then think about them for a few days before deciding. As a rule of thumb, you want your name to somewhat unique and memorable, but not at the risk of confusing potential customers. You also will want a name that is available.

__2. Search Availability of Name(s)

You will want to ensure that your chosen business name is not trademarked or used as an Internet domain name by another entity. If you choose to do business as your legal name, this shouldn't be a problem. Check to see whether your ideas are already on the list of fictitious or assumed business names on record with your county clerk or Secretary of State.

There are multiple sources for searching the availability of a business name, including the U.S. Patent and Trademark Office's trademark search tool, but you may want to start with just a simple Internet search. Even if the name is not taken by another business, your general search may reveal that the chosen name already has associations that would be detrimental to your business or confusing to customers.

__3. Register Your Name

If you are registering as a sole proprietor but doing business under another name, you will need to register any such fictitious business names (or "DBAs") along with your legal business name (typically your full legal name).

Registering not only your legal business name but also your "DBA" provides certain advantages. For instance, once your name is registered it can't be registered by another company; and if another entity uses this name, your registration will make it easier to file a legal action.

__4. Obtain Business Licenses and Permits

You will need to obtain all necessary licenses and permits from the federal government, your state government, and your local government. Different businesses require different types of permits and licenses. For example, a sole proprietor opening a hot dog cart in New York City probably won't need any federal licenses, but will need to apply for a Mobile Food Vendor Personal License, schedule a health inspection, and pay a fee for a two-year license.

See FindLaw's Sole Proprietorships and Choosing a Legal Structure sections for more articles and resources.

__5. Get a Legal Review to Ensure Your Business Starts Off on Solid Ground

A sole proprietorship offers the least amount of complication in terms of start-up requirements when compared with other types of business organizations (i.e. corporation, partnership, etc.). But at the same time, sole proprietors are exposed to personal liability for debts and court judgments. To ensure that your new sole proprietorship covers all legal bases and has the best chance for success before opening for business, contact a local business organizations attorney who can help you select the right structure for your type of business and guide you through the process.