Set Up As A Sole Trader
If youre a sole trader, you run your own business as an individual and are self-employed.
You can keep all your businesss profits after youve paid tax on them. Youre personally responsible for any losses your business makes. You must also follow certain rules on running and naming your business.
Advantages Of Registering A Sole Proprietorship
Registering a Sole Proprietorship is the most common form of business operation beginnings in Ontario. The Sole Proprietorship far exceeds the number of General Partnerships under the Business Act or Incorporations in Ontario.
The advantages are as follows:
- Inexpensive to register
- Easy to change or cancel
When You Need To Set Up As A Sole Trader
You need to set up as a sole trader if any of the following apply:
- you earned more than £1,000 from self-employment between 6 April 2020 and 5 April 2021
- you need to prove youre self-employed, for example to claim Tax-Free Childcare
- you want to make voluntary Class 2 National Insurance payments to help you qualify for benefits
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Register A Sole Proprietorship
Most sole proprietorships need to register with Registry of Joint Stock Companies to operate in Nova Scotia.
Use the Sole Proprietor Registration Form to register your sole proprietorship.
Most sole proprietorships need to register to operate in Nova Scotia.
You dont have to register your sole proprietorship if youre:
- a sole proprietorship registered in New Brunswick
- an individual using only your personal name
- a sole proprietorship that has the sole purpose of farming or fishing
Federal Business Number For A Sole Proprietorship
Sole proprietorships are issued Federal Business Numbers by the federal government. The numbers have extension numbers on them for adding the GST number, Import / Export number and the Payroll number. If you do not have employees you do not need the payroll number. If you do not import / export then you do not need that number. If you are not making more than $30,000 you do not require a GST number although you can register voluntarily.
If you own more than one Alberta sole proprietorship the federal government will issue you one Business Number for both proprietorships. All you need to do is let the government know about any additional proprietorships that you register. If you wish you can have a separate GST extension number, separate Payroll extension number and/or a separate import / export extension number for each sole proprietorship so you can track these items separately for both businesses. You might have one number for one and not for the other. You can track GST for both sole proprietorships under one GST extension number if you wish. You just need to provide the federal government with this information. For instance you might want to track GST separately for both proprietorships so you would have a separate number for each.
Order an Alberta sole proprietorship and Federal Business Number (including GST number, payroll number or import/export number if needed and an unlimited number of preliminary name searches until you find the right name.
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What Is Sole Establishment In Uae
Because initial fees are often modest and you can start your business with just one shareholder, a single establishment, also known as a sole proprietorship, might be a viable alternative for entrepreneurs looking to go it alone in the UAE. A qualified foreign investor who establishes a business or establishes a sole proprietorship to provide a professional service is allowed to own 100 percent of the company.
Professional service establishments are excluded from the Commercial Companies Law , although they must be licenced by the Department of Economic Development .
Only UAE nationals or GCC nationalities can form a sole proprietorship to engage out business activity . Expatriates can only establish Sole Proprietorships to provide professional and consulting services .
Foreign-owned businesses must appoint an NSA to assist them in acquiring licences, visas, and other documents. In exchange for an annual fee, a National Service Agent is a UAE national who assists a foreigner with licencing procedures and other government-related affairs. NSAs are not involved in the business in any way.
Does A Sole Proprietor Need An Ein
The EIN or Employer Identification Number is a unique identifying number with the Internal Revenue Service for a business. A sole proprietor is not required to have an EIN unless they have employees. A sole proprietorship without employees will simply use the owners social security number .
Some sole proprietors will get an EIN even if they are not required to as some of their clients will require the business to supply an identifying number which will be used to issue a 1099 at the end of the year. They could choose to use their SSN, but dont want to share it for privacy reasons.
Applying for an EIN for a sole proprietorship with the IRS takes about 5 minutes and there is no cost.
Types Of Sole Proprietorships
A sole proprietor may operate as an independent contractor , a business owner, or a franchisee.
- Independent Contractor: An independent contractor is a self-employed sole proprietor who takes on projects on a contract basis with clients. They have the freedom to choose which clients they take on, but they are often subject to the processes and methods that the client requires.
- Business Owner: Business owners can also be self-employed sole proprietors, but unlike the contractor, there is much more autonomy in how the work is completed for clients, and the operation itself may even be more complex with employees and/or intellectual property.
- Franchisee: Franchise owners may also be sole proprietors. The franchisee benefits from the guidance, brand, business model, etc. in exchange for royalties paid to the franchisor.
The Sole Proprietorship Is The Simplest Legal Structure For Owning Your Own Business
Sole proprietorships are so easy to set up and maintain that you may already own one without knowing it. For instance, if you are a freelance photographer or writer, a craftsperson who takes jobs on a contract basis, a salesperson who receives only commissions, or an independent contractor who isn’t on an employer’s regular payroll, you are automatically a sole proprietor.
However, even though a sole proprietorship is the simplest of business structures, you shouldn’t fall asleep at the wheel. You may have to comply with local registration, business license, or permit laws to make your business legitimate. And you should look sharp when it comes to tending your business, because you are personally responsible for paying both income taxes and business debts.
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Check On Other Permits Or Licenses
The fees associated with not having the correct licenses or permits can be debilitating to a young business. Be sure that youve gotten the correct federal licenses and permits and state licenses and permits. These might include:
- A health department permit for preparing or serving food
- A federal license for transporting animals
- A health and safety training for opening a daycare
- A certification exam to become a financial advisor
- A zoning permit to operate your business from home
- Registration with the state tax authority if you have employees or collect sales tax
Do the legwork up front and find out what licenses and permits you need. The fees youll pay during this process are nothing compared to the fines youll pay if you havent filed the right paperwork.
Determine If You Need A Permit Or License For The Type Of Business You Have
Do you need to obtain any state and federal business permits or licenses? Most likely, yes. The best way to find out what licenses are relevant to your sole proprietorship is to go onto the CalGold database. This site is designed simply and guides you based on locations and business. In the state of California, whether the business is big or small, the business must apply for a general city business license. Regulatory and professional licenses for a barber, real estate agent, restaurant, and every type of business, will find regional, local, state, and federal information in the database.
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Gaining A Sole Proprietor Certificatein South Africa
The Sole Proprietorship Certificate registration costs between R 590- R990 . With this certificate, you obtain a registered trading name and a personal tax number.
As a registered taxpayer, you can sign up to use the SARS eFiling service, which allows you to file a tax return, make payments to SARS, request a tax clearance certificate, and access many other benefits.
Do I Have To Apply For Hst
Once your business earns $30,000.00 or more in a year between January 1st and December 31st, you must apply for HST. If the company does not reach the $30,000.00 within this timeframe, the HST is optional. You may find that suppliers who contract to you may want you to have HST even when you are below the threshold of $30,000.00.
If you wish for additional information on registering HST, you can go to the CRA website directly for further details at
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Overview: What Is A Sole Proprietorship
A sole proprietorship is a business owned and operated by one person. Some states allow for joint ownership by a spouse, but for the most part, “sole” means one owner.
Unlike an LLC or corporation, a sole proprietorship does not have to be registered with the state.
If you begin doing business on your own, whether you’re working on the side as a freelancer, building a consulting firm, or opening a food truck, you’re a sole proprietor by default until you bring in a partner or file business formation paperwork with the state.
As a sole proprietorship, your business is inseparable from you for tax and legal purposes. This simplifies business document management immensely.
Profits from your business “pass through” to your personal income and are reported on Schedule C of your personal income tax return. This makes a sole proprietorship a simple business to start and run.
On the downside, because there’s no separate legal entity, if the business is sued or owes money, you’re personally accountable. Creditors can come for your home, cars, savings, and other personal assets to satisfy debts.
Setting Up As A Sole Proprietor In California
If you are considering starting a new business in California, one of the first decisions you must make is what type of business entity you want to form. If you are the sole owner of the business, one option is a sole proprietorship.
Establishing a sole proprietorship in California is generally a simpler process than forming a corporation or an LLC. Sole proprietorships do not need to register with the state. You may need to obtain certain business licenses and permits, file tax and employer identification documents, and file a Fictitious Business Name Statement.
Before taking these steps, entrepreneurs should fully evaluate all options for forming their new businesses. While they are relatively easy to establish, other factors may make sole proprietorships unattractive.
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Position Your New Sole Proprietorship For Success
Starting a business as a sole proprietor is one of the biggest choices youll ever make. Though the risk is great, so is the reward and the best part is that you can start it on your own without leasing a building, hiring others, or requiring expensive training. With the steps I shared in this post, youll build a strong foundation to ensure lasting success.
Editor’s note: This post was originally published in September 2018 and has been updated for comprehensiveness.
Starting A Sole Proprietorship
Sole proprietorships are strapped with big risks. Increased personal liability, difficulty raising capital, and a perceived lack of professionalism are a few pitfalls sole proprietors must navigate.
Still, the potential financial rewards could be more than worth the risk especially if you plan thoroughly before launching a new business and weigh the benefits and disadvantages.
Below, well look at the pros and cons in more detail.
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Does Registration Protect My Business Name
The Business Names Act does not protect the exclusivity of a registered name. You may be able to protect your business name by registering a trademark under the Trade-Marks Act . It may be useful to talk to your lawyer or contact the FedDev Ontario – Small Business Services for more information on trademarks.
The Business Names Act does not prohibit registration of identical names, but if you decide to use a name that is the same as or confusingly similar to that of an existing business, it could result in a lawsuit. The person registering the name also assumes full responsibility for any risk of confusion with an existing corporation, business name or trademark.
You may also wish to do some research to see if incorporating is a better alternative for your business. Identical corporation names cannot be incorporated in Ontario. If you incorporate and carry on business under the corporate name set out in the Articles of Incorporation, there is no requirement to register under the Business Names Act. However, if the corporation is operating with a name that is different from its corporate name, the operating name must be registered under the Business Names Act.
Central Production and Verification Services Branch staff cannot provide specific advice on name selection. If you are not sure about the use of a name, you should consult a lawyer.
Penalties for not registering
Choosing a business name
Restrictions on business names
Are There Other Provincial Or Municipal Accounts Required
You can visit this terrific website and submit what type of business you will be operating within that will list any additional applications you may be required to submit to either the Provincial or Municipal governments in your jurisdiction. You can link to this website and review by going to This is a handy tool when starting a business.
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Criteria For Individual To Start A Sole Proprietorship In Dubai
- The majority of a sole proprietorship’s activities are professional. Medical services, engineering consultancies, management consultancies, legal consultancies, IT consultancies, and other similar services are examples of these types of services. To get a licence for many of the operations covered by this legal form, the owner or manager must demonstrate specified educational requirements.
- It may also be necessary for the owner or management to sit for tests in order to prove their qualifications in the UAE. Depending on the activities chosen, these exams may be required on a yearly basis. These exams are held at the American University in Dubai.
- Some of the tasks may need the licence manager to demonstrate his experience in the business. Work experience letters, for example, to qualify as a licence manager.
- Apostille is required for all documents relating to education qualifications or letters of work experience that are not from the UAE. The UAE consulate in the place of origin and the Department of Education can help with this. The originals must then be authenticated by the UAE Ministry of Foreign Affairs. Additionally, if the educational materials are not written in Arabic or English, they must be legally translated into one of these languages. As a result, this is a crucial rule to remember while forming a sole proprietorship.
Advantages Of A Sole Proprietorship
- Pass-through taxation: For most businesses, being able to pass profits through to personal income results in lower overall taxes.
- Simplicity: Sole proprietorships are by far the simplest business type to create and operate. You can start as small as you like and grow at your own pace without a huge commitment.
- Low costs: The simplicity of a sole proprietorship means you’ll spend less on legal fees and tax services.
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What Are The Benefits Of A Sole Proprietorship
There are several reasons why a sole proprietorship is the most common of all business entities. In short, it is perhaps the simplest type of business to create.
You generally wont have to pay any fees, complete any paperwork, or file any registration paperwork with state or other agencies. However, you may have to purchase certain licenses or permits. In addition, you have complete control over your business. You are the sole owner and can make any and all decisions. There is also no need to file separate tax returns for your business.
You Want To Create A Creative Or Memorable Business Name
Operating under a DBA also helps you create a name that is unforgettable. To protect your brand and name, you should check about trademarking your businesss brand or name, thereby registering your sole proprietors services and products. Trademarks are used to safeguard business names, logos, slogans, designs, and symbols all which can be used to identify your businesss offerings.
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Does A Sole Proprietor Need A Dba
Sole Proprietors are required by law to use their name as the legal name of their business. However, sole proprietors can operate the business activity under another name, a fictitious business name. Doing Business As, is optional, it is a fictitious name, used when you dont use your own name to conduct business. The state requires that you register this name with them. Sole proprietors who have multiple businesses usually conduct business with a fictitious name.