Operating as a Sole Proprietorship
A sole proprietorship takes the owner’s legal name by default. However, most states allow operating under a different "doing business as" (DBA) name. To do so requires registering the DBA name, usually with the Secretary of State. Registering a DBA name keeps personal identity separate from the business.
Taxation and Legal Responsibility
Sole proprietors must pay self-employment tax instead of corporate taxes, totaling 15.3% of net self-employment income. Income tax is also owed on business profits. These taxes get paid quarterly as estimated taxes.
Business Operations for Sole Proprietorships
Banks often require a DBA filing before accepting a business account for a sole proprietorship. Additionally, operating under a DBA allows targeting new markets under a new domain name.
Sole proprietorships need no formal registration with state or federal government, only requiring appropriate licensing and permits to legally operate. However, sole proprietors remain personally liable for all debts and obligations.