A sole proprietor runs a business for profit and takes responsibility for all the debts and liabilities incurred. You can set up a sole proprietorship with very little paperwork and minimal expense. A sole proprietor has complete control over the management of the business, but may find it difficult to develop it in the longer term. Many successful businesses start as sole proprietorships and become more formal business entities when they expand at a later date. Before starting to trade, a sole proprietor should obtain all necessary certificates from the Indiana authorities.
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If you carry on business in your own name, you don’t need to register the name with the Indiana Secretary of State. If, however, you prefer to use an assumed business name, which is known as a DBA, or "doing business as," you must contact the county recorder in the county where your business is based. Registering a DBA does not necessarily protect it from use by another business entity.
The Indiana Secretary of State classifies a sole proprietorship as an informal business association. When a sole proprietor sets up his business, he does not need to register with the secretary of state. In addition, Indiana does not require a sole proprietor to file informational or annual returns. Sole proprietors, unlike corporations, do not need to obtain a certificate of good standing from the secretary of state.
A sole proprietor must report his business income as part of his personal income for the purposes of taxation. Certain sole proprietors must also register with the Indiana Department of Revenue if, for example, they sell tangible products, employ other workers or sell food and beverages. Other businesses that may require registration include car rental businesses and short-term rental enterprises. Any business that conducts sales -- either retail or wholesale -- must obtain a registered retail merchant's certificate. The Indiana Department of Revenue provides on its website a full list of sole proprietorships that must register with them. If you need to register, you should complete and file a business tax application form -- Form BT-1. If you employ any workers, you must also apply for an employment identification number, or EIN, from the IRS.
Indiana does not operate a system of comprehensive business licenses. Depending on the nature of your business, you may have to apply for relevant permits and/or licenses. The Indiana government website provides a full list of specific occupational business licenses and contact details for all relevant applications. For example, any business selling alcohol must obtain a license from the Indiana Alcohol Tobacco Commission, while a sole proprietor who sells food should obtain a permit from the division of retail foods, which is part of the department of health. The Indiana Department of Financial Institutions regulates businesses that provide financial services.