New Hampshire Sole Proprietorship

How to Become a New Hampshire Sole Proprietor

In New Hampshire, becoming a sole proprietor is simple. There’s no formal setup or fees. Just start working, and you’re set. However, even though it’s easy, consider some extra steps along the way. While not necessary, many sole proprietors find them helpful.

DBA Acquisition

A doing business as (DBA) name is a crucial part of many sole proprietorships, as it enables you to use an assumed name for your business, rather than your own personal name. The advantages of acquiring a DBA start with image ― most customers feel that an assumed name is more professional and trustworthy than doing business with a company that uses its owner’s personal name instead.

That said, sole proprietors can sign up for a business bank account using their DBA name, which is another step that goes a long way toward making customers feel more comfortable doing business with you.

In New Hampshire, DBAs are often referred to as “trade name”. Before selecting a trade name, you’ll first need to check its availability by searching it. For help determining your name, you may also choose to consult New Hampshire’s guidelines on name availability. When you’ve selected a name, you can claim it by competing an Application for Registration of Trade Name either by mail or through NHQuickStart, New Hampshire’s online filing service.

Determine Taxation Requirements

Sole proprietors without employees usually don’t need to acquire a federal tax ID number (EIN), because as a one-person business, you can typically just use your own social security number for most things an EIN is used for. Still, if you would rather not use your SSN for privacy purposes, it would be a good idea to get an EIN regardless.

Beyond that, the nature of your business will determine which taxes apply to you as a sole proprietor.

There is no sales or use tax in New Hampshire, although other industry-specific taxes (such as tobacco tax, electricity consumption tax, rail road tax, and communications services tax) may be applicable as well. To determine which taxes your sole proprietorship is required to pay, you’ll want to seek more information through the New Hampshire Department of Revenue’s e-Filing system.

Obtain Business Licenses and Permits

There isn’t a requirement in New Hampshire for sole proprietors to acquire a general business license, but depending on the nature of your business you may need other licenses and/or permits to operate in a compliant fashion.

Depending on what types of goods or services your sole proprietorship offers, you may need to obtain a specific operator’s permit and license. In some cases, professional and occupational licensing may also be necessary. For more information regarding state licensing requirements, it’s advised that you visit the Department of Revenue Administration’s website. For a comprehensive guide to occupations that require a license, certification or registration, New Hampshire has compiled a full guide.

In addition, you should check to see if your business needs any licenses or permits on the local level.

Local licensing varies from county to county. For more information on your county’s licensing and permit requirements, it’s advised you contact your city or town clerk. Often, licensing requirements are listed on the town clerk’s website.

What Is a New Hampshire Sole Proprietor?

As opposed to a corporation or limited liability company (LLC), the sole proprietorship is not a legal business entity. The sole proprietorship is a one-person business that is not considered to be a distinct entity from the person who owns it, and it is frequently operated using the owner’s personal name.

Here are the three main things you need to know:

Tax Responsibilities

Because there’s no distinction between the owner and the business itself, sole proprietors don’t need to file business tax returns ― they instead simply claim any business profits or losses on their personal tax returns.

Contracts

Sole proprietors are allowed to sign contracts using their personal name, and along those same lines, customers can write checks to the business by using the sole proprietor’s name.

More Flexible

The other big difference between sole proprietorships and more formal business structures is the fact that sole proprietors are allowed to commingle business and personal assets as much as they want to. With LLCs and corporations, ownership is required to keep their assets separate from those of the company. The downside of this aspect for sole proprietors is that if your business is sued, creditors are free to pursue your personal assets like your house, car, personal bank accounts, etc. For corporations and LLCs, creditors are limited to your business assets.