Opening up your sola business is both incredibly exciting and a little terrifying, all at once! It brings up a lot of questions:
- What is the difference between a sole proprietorship, a DBA, an LLC and a corporation?
- What is an EIN and do I need one?
- What is a Reseller ID and do I need one?
What's the difference between DBA, Sole Proprietorship, LLC, S Corps, and C Corps?
Where to Start Your Sole Proprietorship!
If you are near the beginning of your business journey, you will likely be operating as a sole proprietorship. The information below will help get you started but know there will be extra steps to create an LLC, DBA and corporation (and we will be doing write-ups on those steps in future blogs!).
Here are some first steps to take in order to leap into entrepreneurship! Please note: this advice is given on behalf of our experiences and research. It may not pertain to your individual circumstance. If you want to ensure that you are following the correct path for your business, consult an attorney and an accountant.
Apply for a Federal Employer Identification Number (EIN) here.
An EIN is issued by the IRS and assigned to your business for tax-related purposes.
It is not necessary to obtain an EIN for sole proprietorship because you can use your social security number. That said, you may choose to obtain an EIN to protect yourself from giving out your social security number.
If you have hired an employee, an EIN is required.
Apply for a Reseller ID
If you want to sell your products and services, it is likely that you will need to file for a reseller ID, even if you are operating your business as a sole proprietorship.
In general terms, this license or permit allows a business owner to sell products that are subject to retail sales tax.
Reseller ID requirements may vary from state to state so please be sure you have obtained the proper documents in order to do business in your state.
Please note: A reseller ID is issued by your state and is different than an EIN.
You can find your state's sales tax requirements below:
*States with no reseller ID
Starting your own business takes a lot of research, a lot of patience and a lot of work! If the process seems confusing and overwhelming, that's okay. Take everything slowly, step-by-step and you will be an official business when the time is right.
Is there anything we missed? Do you have a sole proprietorship and want to add anything to this blog? Send us an email at firstname.lastname@example.org and we would be happy to help!