What kind of business structure you’ll use is one of the first decisions you’ll need to make if you’re thinking about opening a business in Washington state. A sole proprietorship is frequently the easiest and most clear-cut choice for small business owners. However, what really is a sole proprietorship, and how does one establish one in Washington? These and other inquiries will be addressed in this essay.
A sole proprietorship is a sort of business organization where a single person owns and runs the company. There is no legal separation between the owner and the business, unlike with a corporation or LLC. This implies that any debts or legal problems the company may have are personally responsible for the owner. However, forming a sole proprietorship is frequently the simplest and least expensive choice for small enterprises because there are no formal procedures or costs involved.
There are a few essential steps you must follow in Washington state in order to establish a single proprietorship: 1. Decide on a company name. If you’re doing business under your own name, you don’t need to register your business name; however, if you intend to use a different name for your company, you must register a trade name (often referred to as a DBA, or “doing business as”). The Washington Secretary of State’s office is where you may check if a name is available and register your business name.
2. Acquire any licenses or permits required. You could require special licenses or permits from the state or local government depending on the type of business you’re launching. If your company needs any licenses or permits, you can check with the Washington State Business Licensing Service.
3. Apply for a business license from the state. Every company doing business in the state of Washington must have a state business license. Through the Washington State Department of Revenue, you can submit a license application online.
4. Activate your EIN. For tax purposes, your company’s EIN (Employer Identification Number) serves as a special identity. You might need an EIN to open a company bank account or submit specific tax forms even if you don’t have any workers. The IRS offers an EIN for no charge.
There are several potential drawbacks to take into account, despite the fact that getting a DBA can be a rather straightforward and inexpensive process. One is that a DBA does not give your company name any legal protection. You might not have any legal options if someone else starts using the same name or one that sounds close. Furthermore, since a DBA is not a different legal entity from your company, you will still be held personally responsible for any debts or legal problems that develop.
Is it Beneficial to Get a DBA? Your particular business demands and objectives will determine whether or not acquiring a DBA is worthwhile. You might not require a DBA if you intend to run your firm under your own name. A DBA can, however, be a wise investment if you want to operate under a different name or want to project a more credible image.
A DBA does not submit a different tax return. A sole proprietorship and a DBA are taxed as part of the owner’s personal income tax return because they are not independent legal organizations. Where to Register a DBA in the State of Washington
You must submit an application to the Washington Secretary of State’s office in order to register a DBA in the state of Washington. This can be done by mail or online. A $5 application fee is required, and your DBA must be renewed every five years.
In conclusion, establishing a sole proprietorship in the state of Washington is a reasonably straightforward procedure, but there are a few critical measures you must follow. You can start your firm right away by picking a name for it, acquiring any relevant licenses or permissions, signing up for a state business license, and obtaining an EIN. And if you choose to get a DBA, make sure to carefully consider the potential benefits and drawbacks before deciding.
The expense of organizing an LLC in Washington State is not discussed in the article because it is about beginning a sole proprietorship, not an LLC. On the other hand, the website of the Washington State Secretary of State lists the costs involved in forming an LLC, which include a $180 filing charge and a $200 annual report fee. In addition, additional expenses including legal fees and taxes could be incurred during the formation and maintenance of an LLC.