In a sole proprietorship, the owner is entirely accountable for the operation of the business, including all debts and liabilities. This indicates that the owner has all authority over the company and is entitled to all earnings. A sole proprietorship can also be established quickly and cheaply.
1. Pick a company name: You must select a name for your company that is not currently in use in Minnesota by another company. Through the Minnesota Secretary of State’s website, you can determine whether a business name is available.
3. Obtain any required licenses and permits: Depending on the nature of your company, you might need to apply for different licenses and permits from the state of Minnesota or your local government.
4. receive an EIN: You must receive an Employer Identification Number (EIN) from the IRS if you intend to hire staff members or open a business bank account. Taking Money Out of Your LLC for Yourself
You must be paid as an employee of the company if your business is set up as a limited liability corporation (LLC). You will therefore need to set up a payroll system, withhold taxes from your payment, and submit payroll tax reports to the IRS.
The drawbacks of a DBA
DBAs, or “doing business as,” are company names that aren’t the same as the owner’s legal identity. Although a DBA may be a wise choice for a sole proprietorship, there are some drawbacks to take into account. For instance, a DBA offers no liability protection for the owner and may make it more challenging to secure funding or sign contracts. Does a DBA Substitute Filing a Separate Tax Return?
You must apply for an EIN from the IRS if your LLC has more than one member or hires staff. If you want to create a business bank account or file specific tax returns, even if your LLC is a single-member LLC, you could still need an EIN.