Successful Entrepreneurs Who Started Out As Sole Proprietors Sole Proprietorships

There’s no need to register your business name if you’re using your full legal name for your business. You can simply operate your company using your own name and use your social security number for filing taxes. Converting a sole proprietorship to an LLC requires you to file articles of organization with your state secretary. Also, you will have to refile your DBA (or doing business as) to keep your company name. For example, Kate Schade started her company, Kate’s Real Food, as a sole proprietor.

Requirements to file a DBA vary from state to state, and you may need to file at either the state or local level. Check with the office of the secretary of state or county clerk’s office where your business is located. This publication is provided for general information purposes only and is not intended to cover every aspect of the topics with which it deals. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content in this publication.

Examples of Sole Proprietorship

If they cannot find a buyer, the proprietor may pass the business on to a family member or a trusted employee if one exists. A fulsome business plan helps proprietors determine the capital necessary to start up, sustain, and grow the business. Proprietors cannot sell shares, or interest, in their business to raise money. To be successful, proprietors must be “good enough” at the various aspects of their business they have control over. Sole proprietorships offer a flexible and convenient structure for small businesses.

If you want to raise money from investors, it may not be a good idea to be a sole proprietor. However, if you want to maintain control over your company, operating as a sole proprietor can be a good option. Anyone who wants to name their business needs to file a DBA (doing business as). If you are a freelance writer or photographer, for example, sole proprietorship real life examples you are a sole proprietor or sole trader. Depending on the industry, state, and local regulations, you may however have to obtain various permits or licenses. In most cases, the application takes only minutes to complete, and the EIN is assigned at the end of the session, so the business owner can get started using it right away.

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While you may convert to a different business structure in the future, there may be restrictions based on your location. This could also result in tax consequences and unintended dissolution, among other complications. If business requirements exceed the resources and financing available to proprietors, they will need to closely manage their working capital and potentially curtail the acquisition of fixed assets.

• Sole proprietors do not always need a separate business account, however, it’s good practice.
• Sometimes businesses start off as sole proprietorships and incorporate later, when they need to hire additional employees or simply want to separate their business and personal finances.
• Depending on your business and the state where you are located, you may need to obtain a permit or license in order to legally operate.
• A sole proprietorship could be for you if you’re looking to start a business with minimal cost and paperwork, while still having some degree of personal liability protection.
• Any excess self-employment taxes can be rolled over to the following year, or refunded.

Sarah’s Bakery is not just successful because of its high-quality ingredients and innovative flavors. Sarah’s dedication and hard work, combined with her passion for baking, have allowed her to turn her small kitchen into a thriving business with multiple locations, serving a loyal customer base. This story highlights the potential for sole proprietorships to flourish with vision, determination, and creativity.

What makes a sole proprietorship different from other business types?

Want to learn more about the differences between these business structures? Read our guide on 10 important legal requirements for starting a small business. Plus, they usually work from small offices or their homes—thus reducing business expenses. This means they avoid the expensive accounting and regulatory fees that businesses with other structures must pay. As a sole proprietor, you’ll have complete control over business decisions.