Many self-employed New York residents are eager to start their businesses. The simplest and most rational solution to this issue is to join the ranks of sole proprietors.
Organizing and managing a business in this format is the least difficult in America and has no service pitfalls. Although, future business owners will have to adhere to certain norms. Also, be prepared that you will have to face some restrictions regarding the functions of your sole proprietorship.
So, the main task of this manual is to help you answer the essential question – is the business format of an individual enterprise right for you? And, of course, we will tell you which aspects to pay attention to while opening a sole proprietorship and how to set up a business structure in this vein properly.
The Proper Way To Start Business As The New York Sole Proprietor
There is no algorithm for organizing the business work of an individual entrepreneur in New York as for LLC. In addition, the state does not charge additional service fees for the formation or management of this type of business or company. Are you looking to become an individual business owner and start a sole proprietorship in New York? – Just start working!
Though, you still have to go through several additional legal formalities. These service stages are optional. Although many sole proprietors prefer not to neglect them, compliance with these formalities guarantees the legal protection of their interests.
Applying For DBAs
Almost every company and business owner prefers doing business as a DBA. There are many benefits to running a business under an assumed name compared with an entity or LLC. We are talking primarily about creating the business image of your company. Potential clients and consumers will find this approach more professional and give you more confidence. It turns out that a company that uses the real name of its owner is often not competitive.
Let’s clarify that a company owned by sole proprietors can use the DBA to open and manage a business bank account. Customers will appreciate it as one more advantage in favor of the business owner, so they feel more comfortable.
When you are satisfied that your preferred name is open, you can apply for its registration by sending a business certificate to the office of the county clerk of the state in which your business operates.
Clarification & Compliance with Tax Requirements
You can run your business in this format and not hire third-party employees. In this case, you do not need to obtain an EIN (Federal Tax Identification Number) because your Social Security number will replace it. Of course, it would be correct to take care of your confidentiality and still use the EIN and not the SSN.
The nature and the structure of the business activity of individual entrepreneurship determine the list of tax requirements that the state will put forward (as with LLC).
It should also emphasize that New York City self-employed persons are not required to pay franchise and corporate taxes. Income from business activities will be taxed accordingly, which will determine as a tax on the personal income of the owner of the company. For more information regarding county taxes and how to file your taxes, visit the New York State Department of Taxation and Finance website.
Business Licenses & Permits
In New York, there are no conditions for individual business owners to be required to obtain a general license to operate their own business, but in considering the nature of the operation of your business, you may also need other firmans and/or permits to function your business following accepted requirements.
There are over a thousand types of licenses in New York County that cover existing businesses. These licenses may or may not also apply to you. The full of list of firmans and those to whom they belong can be found here, in the «Licensing» category on the official website of the New York County authorities.
When you decide to start a personal business, you may need to use the Business Express system to set up the view to licensing and permits you need to get started. Using such a system, you can carry out maintaining detailed information about your completed organization and get clear needed guidelines for licensing.
To all this, you need to make sure whether your business needs any local approvals or licenses.
In addition to meeting the licensing requirements for your business as defined by the licensing district, you may also need licensing from your local government. For example, cities like New York City quite often apply certain mandatory tolerances and individual licenses.
To find out what types of clearances and firmans can use concerning your business, you can go to New York City’s business service, which will give you a personalized list of licensing conditions for the operation of your business.
New York Sole Proprietor: The Notion & Essence
A sole proprietor is not a legal entity! But any corporation and limited liability company (LLC) has this status. As a sole proprietor, you run the business alone (register and manage it on your behalf). It is worth noting that this gives the business owner advantages, though, imposes additional obligations and responsibilities on him.
Make Sure to Pay Attention to the Following Three Aspects
There are obligations to pay taxes to the state
A business owner and an individual entrepreneur are the same people. It means that filing tax returns is not a requirement, as with an entity or LLC. You need to declare your income and expenses and fill out the declaration of an individual;
Business owners who are registered as sole proprietors have the right to enter into contracts on their behalf, unlike an entity. Also, receiving profit from clients, in checks they can indicate their name in the recipient column;
Flexible terms of business management
The advantage difference between individual entrepreneurship and any entity is the ability to combine work and personal assets. Whereas corporations and LLCs must separate personal assets from company assets. It has several positive and negative aspects. For example, if you have financial difficulties, creditors can seize or confiscate your personal property (house, car, etc.). In the case of corporations and LLCs (or any entity), creditors do not have this freedom, as their powers only apply to business assets.
Of course, the structure of doing legal business as a sole proprietor is greatly simplified while in New York. You don’t even have to pay any commission fees provided for the entity or LLC. At the same time, based on the nature and structure of the business activity that you conduct, you will all have to go through a series of entity stages.
The issues of taxation, obtaining licenses, and permits require more detailed consideration. Also, pay attention to the possibility of obtaining and using DBA. These aspects are vital, as their omission can result in unnecessary legal penalties for you.
We have prepared this manual so that you can think over the structure of your business to the smallest detail. Manage it correctly and get more legal profit!