As the Small Business Network Center in North Carolina explains, a sole proprietorship is a business owned and operated by an individual. If you are the sole proprietor, all of the profits and losses from the business go to you. It's easy and inexpensive to create a sole proprietorship. The primary requirement is to choose and register the name of your business in the county where it's located.
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If your name is Ella and you plan to start a new business called Ella's Umbrellas, you must choose and register a business name. That requirement applies to any business with a name that is not the same as the owner's exact legal name. In North Carolina, this is called an "assumed business name." In some states, it is known as a "doing business as," or DBA, name. In other states, it is known as a fictitious name or a trade name, which is not to be confused with a trademark.
Finding the Right Name
If someone else is already using Ella's Umbrellas as a business name in North Carolina, you'll have to find another name to register. You can search databases in the county where your business is based or on state databases to see if anyone is using Ella's Umbrellas. If someone is using Bella's Umbrellas, you might want to choose a different name in order to avoid confusion.
Register Your Name
You register your assumed business name with the register of deeds in the county where Ella's Umbrellas is located, explains the Citizen Media Law Project. Registration is accomplished with a one-page form called a Certificate of Assumed Name for a Sole Proprietorship, Partnership, Limited Partnership. There is a fee to register, but unlike some states, North Carolina doesn't require you to publish your new business in the newspaper. As soon as you have registered, you are allowed to transact business.
You likely will need to take care of some other obligations when you become a sole proprietor. Although you will be taxed as an individual, you'll need to file for an Employer Identification Number, or EIN, from the Internal Revenue Service if you have any employees. You can even apply online for an EIN if you have no employees, since some banks may require the number, along with a copy of your assumed name certificate, in order to open a bank account under your business name. If you hire employees, you'll also need to register with the state of North Carolina to pay state employment taxes. Find a nearby location to do at the Department of Revenue website. And if you have three or more employees, you'll have to obtain Worker's Compensation insurance from the state.
The Citizens Media Law Project suggests registering Ella's Umbrellas as a federal and state trademark. This can give you extra protections if another party infringes on the name of your business. Obtaining a domain name for Ella's Umbrellas is also a good idea, especially if you plan to sell online.