Can a Sole Proprietor Have a Business in Multiple States?

By Wayne Thomas

For new business owners, complying with all of the laws in one state can be tricky. Owners who wish to conduct business in multiple states have additional, sometimes contradictory, requirements to juggle. Fortunately, the ease and speed in setting up a business as a sole proprietorship generally holds up across state lines. However, owners should be aware of specific local rules, particularly with regard to certain regulated industries, to ensure a successful multistate operation.

For new business owners, complying with all of the laws in one state can be tricky. Owners who wish to conduct business in multiple states have additional, sometimes contradictory, requirements to juggle. Fortunately, the ease and speed in setting up a business as a sole proprietorship generally holds up across state lines. However, owners should be aware of specific local rules, particularly with regard to certain regulated industries, to ensure a successful multistate operation.

Overview of a Sole Proprietorship

When it comes to liability for the debts and taxes incurred by a business, the owner of a sole proprietership is personally responsible. In a sense, the owner and the company are treated as one, with only one tax return filed and no separation between personal and company assets. For this reason, so long as the owner operates the business under his or her name, most states do not require the company to be registered, provided that the business is not operating in a regulated industry and no professional licenses need to be obtained.

Ready to start your LLC? Start an LLC Online Now

Multistate Operations

Operating a sole proprietorship in multiple states can be straightforward, but it requires compliance with the specific requirements of each state, which can be conflicting. A small number of states, including Nevada, do mandate that all companies, regardless of type, register their business with the state. In addition, certain regulated industries require that specific licenses be obtained before beginning operations. An example would be a business owner wishing to sell tobacco products in Alaska, which requires obtaining a state business license endorsement.

Tax Considerations

In addition to occupational and professional licenses, some states require a sole proprietor to obtain a local sales and use tax permit if the business will sell goods or services within its borders. Further, regardless of what transactions are involved in the business, any state where income is generated typically requires the filing of a state return and payment of associated taxes.

Registering Fictitious Names

By default, sole proprietorships take the name of the owner. However, for the purposes of branding, many owners choose to operate under a fictitious, or Doing Business As, name. DBAs often require state registration, and in most states, no two businesses can have the same fictitious name. For that reason, an owner must register the fictitious name in every state where the business operates and DBA registration is required.

Ready to start your LLC? Start an LLC Online Now
How to Make a Sole Proprietorship Official

References

Related articles

Putting a Sole Proprietorship on Paper

One of the advantages to operating a business as a sole proprietorship is the lack of formal organizing requirements. A photographer, personal trainer or anyone who runs a one-person operation can start doing business as a sole proprietor without necessarily filing any paperwork with the government. Operating a business this way can be disadvantageous, however, when the proprietor wants to prove the existence of the business as a distinguishable entity. When an owner wants to open a credit account, set up services in the name of the business or otherwise separate business operations from his personal affairs, it helps to have some written documentation that verifies the company's status.

Sole Proprietorship in Georgia

A sole proprietorship is a common business entity because it is relatively simple to set up and allows for a great deal of flexibility in how the business is managed. As a sole proprietor, you have complete control over the management of the business, take all the profits and avoid corporate income taxation. Although there are no registration requirements to initially form a sole proprietorship in Georgia, depending on the type of business, the Georgia Secretary of State recommends professional, local and tax registration.

What Does DBA Mean in Business?

In the business world, DBA - which stands for "doing business as" - is a vitally important acronym to know. It signifies that an individual or company is doing business under a fictitious name. One common example would be a chain store franchise, operated under a commercial name familiar to everyone but actually run by an individual or firm owning the local franchise. State laws govern the creation and use of DBA fictitious names.

LLCs, Corporations, Patents, Attorney Help

Related articles

Difference in Business License & Registering a Business

Starting a business can be complicated. In addition to hiring employees, finding a location and establishing clientele, ...

Can an LLC Have More Than One DBA?

Running a successful business requires a keen understanding of the marketplace. In the initial stages of operations, ...

Is It Difficult to Discontinue a Sole Proprietorship?

Since many owners choose to structure their business as a sole proprietorship due to its ease in startup, it might seem ...

How to Get a Sole Proprietorship

For an independent entrepreneur, a sole proprietorship is a common business structure because it is relatively simple ...

Browse by category