One of the simplest types of business structures that is straightforward to start up and operate is the sole proprietorship. A single person is in charge of all aspects of this sort of company and is both the owner and operator. Due to its simplicity and lack of procedures, sole proprietorship is a common choice for small firms. A potential business owner must be aware of some regulations, nevertheless, while setting up a single proprietorship.
First and foremost, obtaining all necessary licenses and permits to run the firm is a need for sole proprietorships. Depending on the kind of business and the area, this could change. For instance, a company that sells food or alcohol could need additional licenses and permits. Before launching a firm, prospective entrepreneurs must do their homework and acquire all relevant licenses and permits.
The registration of the business with the state is another prerequisite for a single proprietorship. In order to achieve this, a fictitious business name or doing business as (DBA) name must be filed. If a business owner intends to conduct business under a name other than their own legal name, a DBA name is necessary. The county clerk’s office in the county where the business is located is where sole proprietors in Tennessee can register for a DBA name.
In Tennessee, sole proprietors are subject to both state and federal income tax obligations. Depending on the nature of the firm, they could additionally need to pay sales and use tax. Schedule C (Form 1040), which is used by sole proprietors to file their personal tax returns, is where they must list their business’s earnings and outlays. In Tennessee, single owners must also pay a business tax that is based on the company’s gross receipts. The annual payment of the business tax is required on or before April 15th.
There are numerous options for small businesses to pay taxes. They have the option of paying their taxes either quarterly or yearly. To prepare and file their taxes, they can also use tax preparation software or employ a tax expert. To make tax preparation easier, it is crucial for small business owners to maintain precise and complete records of their revenue and expenditures throughout the year.
For sole owners who desire to conduct business under a name other than their legal name, getting a DBA name is something to think about. A DBA name can assist provide the company a unique identity and make marketing and promotion of the company easier. However, sole proprietors are not required to obtain a DBA name. They may carry on operating the business under their legal name.
A DBA name also doesn’t submit a separate tax return. A sole owner utilizing a DBA name must still use Schedule C (Form 1040) to record their business’s earnings and outlays on their personal tax return. The DBA name is only the name under which the company conducts business.
In conclusion, a prospective business owner should be informed of the requirements involved in establishing a sole proprietorship. The registration of the business with the state, obtaining all relevant licenses and permits, and paying the necessary taxes are all crucial. Small business owners can pay taxes in a variety of ways, and for those who want to operate under a name other than their legal name, getting a DBA name is something to think about. However, a DBA name does not file a separate tax return, and sole owners are still required to use Schedule C (Form 1040) to disclose their business income and costs.