A sole proprietorship is a business entity owned by one person. It is not a separate legal entity, meaning that the business is essentially the owner's alter ego, and the owner is personally liable for the debts of the business. Business owners are not required to register sole proprietorships in Pennsylvania; but if you plan to use a name other than your own for the business, you must register the fictitious business name.
When you start a sole proprietorship in Pennsylvania, the business name is automatically the name of the owner. Unless you file for a "fictitious business name," your business is legally required to operate under your name. As long as you operate the business in this manner, the state does not require you to register the business.
Reasons to Register
Sole proprietors in Pennsylvania have the option of registering a fictitious business name, which allow you to operate your company under a different name than your own. Many sole proprietors take this extra step so they can brand their businesses with a unique name. In addition, registration protects your business name. Once you've registered a fictitious business name, no other company in your locale can register that name. Unregistered sole proprietorships do not have this protection.
Fictitious Business Name Registration
To register a fictitious business name, you must submit a written request to the Pennsylvania Department of State to determine whether the proposed name is available for use. You will then download and fill out the form to register a fictitious business name (see Resources). Submit the form with the appropriate filing fee to the Department of State. After filing the paperwork, you are required to advertise your fictitious name in two local newspapers. Contact the courthouse in your county to inquire if the notice must be published in a particular "legal newspaper." Your notice must include the fictitious business name, your business address, your name and address, and a statement that you've submitted an application for a fictitious business name.
Penalties for Failing to Register
It is essential for a sole proprietorship to register a fictitious business name before doing any business. If you fail to register your name and enter into a business contract, the state may impose a civil penalty on you; in addition, the contract will not be enforceable. This means that if the other party to the contract violates the terms of the agreement, you won't have the option to seek relief in court.