A sole proprietorship is the easiest form of business to establish, but it does carry the most financial liability risks because the owner is responsible for the debts and obligations of the business.
There are both advantages and disadvantages of starting a sole proprietorship, and more more women entrepreneurs start sole proprietorships than any other form of business structure.
Starting a sole proprietorship involves taking three basic legal steps:
- Register Your Business’ Name: More women entrepreneurs own sole proprietorships than any other form of business. Even though a sole proprietorship is not subject to the name availability rules of other business structures, you still need to register the name of your business.
- Get an Employer Identification Number (EIN): If you do not have any employees, a sole proprietorship is not required to have an EIN, but it is still a good idea for women sole proprietors to get an EIN.
- License Your Sole Proprietorship: In addition to federal and state business registration, individual counties, towns, and cities often have their own unique requirements for legally establishing your business. For example, in some places, you may not need to file a fictitious business statement, but in many local areas, you do.