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Registering Your Sola Business - First Steps!

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?

The second you decide to start a business, you have a Sole Proprietorship. This is the simplest route. However – this combines your personal assets with your business assets. This means you won't have any protections against liability.
DBA means "doing business as." It's just the difference between your legal name and your day-to-day business name! DBAs are recommended for every business entity. To set yours up, pay a quick visit to Google. There are plenty of sites that can walk you through the appropriate process for the state in which you will be conducting business.
LLCs offer protection of your personal assets. However, if (and when!) you start to get employees, you'll want to carefully research your tax burdens for things like life and health insurance. Here you get more protection, but more complexity and responsibility as well. 
C Corps and S Corps are also options, but at that point, you'll need robust structures including shareholders, retirement plans, directors, and the like. And if you're there, well, you can probably stop reading now and be on the lookout for our corporate piece in this series to come out!

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:

    Alabama Hawaii Massachusetts New Mexico South Dakota
    Alaska* Idaho Michigan New York Tennessee
    Arizona Illinois Minnesota North Carolina Texas
    Arkansas Indiana Mississippi North Dakota Utah
    California Iowa Missouri Ohio Vermont
    Colorado Kansas Montana* Oklahoma Virginia
    Connecticut Kentucky Nebraska Oregon* Washington
    Delaware* Louisiana Nevada Pennsylvania Washington, D.C.
    Florida Maine New Hampshire* Rhode Island West Virginia
    Georgia Maryland New Jersey South Carolina Wisconsin
    Wyoming

    *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 wholesale@ohyourelovely.com and we would be happy to help!

     

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