When starting a new business, a sole proprietorship is a specific type of business structure you can consider. Only one person runs and owns this kind of business structure. But, just like with other start-up businesses, it is important to make yourself familiar with the different sole proprietorship fees and other costs involved with this form of business.
Having a business goes beyond printing and distributing business cards or launching a website. There are many unexpected expenses that may cause serious damage not only on your business but also on your personal life. While there is nothing wrong with having great expectations, it is better to stick with realistic ones.
Federal and State Licenses and Fees
Among the early sole proprietorship fees you should make have something to with making your venture a legal entity. It involves working with the state for filing and paying for the license to conduct business. You need to complete DBA or doing business as paperwork if you want to do business using an assumed name or fictitious business name.
Laws may differ among states and countries but even if it is not required by local laws, your bank may require this for accepting checks made payable to your business name.
Sole Proprietorship Fees and Taxes
An equally early requirement is setting up your business with the federal and state taxing agencies. This includes receiving an EIN or Employer Identification Number.
Be ready to pay every quarter once cash begins flowing. Entrepreneurs have numerous deductible items and they also need to pay the different social security taxes. Take note that no one withholds for you. A great practice is setting up a different account for the taxes and transferring cash into it while it flows in.
You have to plan for all these things as you calculate your initial requirements of cash flow. This way, you can maintain your sanity and also your business in the future.
You probably don’t think that you will require continuous legal, accounting or any other help. However, it is recommended that you use such professionals once you get started. A CPA or accountant can help you in setting up the initial books of your business. It will be great that you consult an attorney to ensure that all of the contracts you will use are binding and correct. You also need to talk to an insurance agent and provider to get a suitable coverage for different business liabilities.
There are also businesses that should get bonded that serves as the guarantee of their performance to the customers.
Costs of Startup Equipment
All types of business, including sole proprietorships, have certain equipment needs. Such equipment needs are specific to the particular form of business activity you will undertake and it may also include an upgraded or new printer and computer, specialized tools, or maybe a vehicle for your business.
Knowing sole proprietorship fees and other costs involved is important to ensure that your venture kicks off on the right foot.