In all the years I've been using NCH the service has been great with my filings with the State of Nevada and answering any of my questions or concerns.

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Nevada is #1 in Lawsuit Protection

Be Your Own Sole Proprietor

Be Your Own Sole Proprietor

You don’t need to live in Nevada to enjoy the best asset and lawsuit protection a Nevada-registered business can provide

What is Sole Proprietorship?

A sole proprietorship is also known as a sole trader or simply a proprietorship. It is the quickest and easiest way to start a business as it comprises only one venture owner and lacks strict government regulations.

Because of this, many individuals, self-contractors, and consultants prefer to start a sole proprietorship. Once their venture has assets and becomes successful, they either remain a proprietorship or expand to a limited liability or corporate entity.

Sole proprietors conduct business under their own names, as creating a corporation or trade name isn’t required. They pay personal income tax based on profits earned from their company and don’t have to file a separate tax return. This means all gains, losses, and other taxable items are combined.

Understanding a Sole Proprietorship

If you’re looking for a simple and quick way to start a business, consider registering for a sole proprietorship. You won’t need to worry about federal or state forms, and it has few regulatory burdens, making it the most recommended step for a startup.

When you apply for a sole proprietorship, you are the lone owner of your business. Therefore, your personal and the venture’s finances are the same.

Sole Proprietorships vs. Other Business Structures

There are many differences between a sole proprietorship and other business structures.

Because there is a lone owner, all profits go to them. In contrast, earnings are split equally or divided in a predetermined amount amongst partners or are given to shareholders.

Similarly, the liabilities are unlimited in a sole proprietorship versus LLC, where business debts are separated from the owner's.

Forming a Sole Proprietorship

It’s easy to form this business structure. In fact, you can start a sole proprietorship online. You don’t need to complete much paperwork, meaning you can kickstart your venture faster. However, depending on your state and type of business, you may need to obtain a license or permit.

While some business structures require you to have a checking account, sole proprietors can conduct their finances through their personal accounts. You will also need various documents, depending on your needs. For instance, if you hire employees, you must secure an employee identification number or EIN from the Internal Revenue Service. In addition, selling taxable products requires you to register for a sales tax license.

ADVANTAGES

  • Ease of Formation
  • Pass-Through Tax Treatment

DISADVANTAGES

  • Personal Liability
  • Lack of Continuity
  • Hard to Attract Investors

Types of Sole Proprietorship

Sole proprietorships can operate as three different entities: independent contractors, business owners, and franchisees.

An independent contractor is a self-employed sole proprietor who takes on contractual projects from various clients. However, they have to operate under the processes and conditions of the client.

Meanwhile, business owners are self-employed proprietors with more autonomy than independent contractors. They can choose however they want to work and whoever they want to work with.

Finally, franchisees are also sole proprietors who purchase the right to use an existing company’s trademarks, brands, and proprietary knowledge. They’re very similar to business owners, only that they’re using the business model of a more established brand.

Sole Proprietorship Cost

Another reason many prefer to register a sole proprietorship is the low-cost budget to register a sole proprietorship. But you must remember the cost varies depending on the nature of your business.

Unlike an LLC or corporation, you don’t need to file with the state regarding a proprietorship. However, while there is no initial registration fee, you must file for sales or service tax numbers.

There are various expenses associated with starting a sole proprietorship to remember. For instance, you must factor in equipment, such as tables, electronics, and machinery. Moreover, some businesses require specific licenses, permits, and certifications, with costs and renewal fees.

Another thing to consider is your working environment. Will you be working from home or renting an office? How do you plan to meet with clients or serve customers?

Register your Sole Proprietorship in Nevada with NCH

Is a sole proprietorship the right business structure for your venture? Find out by consulting an expert from NCH, the state’s leading business formation service provider.

Our services go beyond paperwork. We’ll aid you with the required forms and payroll management. We’ll also help you with sole proprietorship taxes, including key considerations, deductions, and tax obligations for individuals operating as sole proprietors in the state.

Make the most of our private consulting services for all your tax and legal concerns. Partner with us so we can develop effective solutions to minimize your liabilities and protect your wealth. Contact NCH today at 1-800-508-1729 for your FREE consultation.

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Sole Proprietorship: A Comprehensive Overview and Comparison with LLC