Georgia Sole Proprietorship

How to Become a Georgia Sole Proprietor

In Georgia, becoming a sole proprietor is simple. There’s no formal setup process or fees. To run a Georgia sole proprietorship, just start working. However, even though it’s easy to start, there are some extra steps you might want to consider. 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.

Your first step in the process of obtaining a DBA in Georgia is to run a business search to determine whether your desired DBA is available for use. Then, to claim your DBA, you will need to file your trade name with the clerk of the Superior Court in your county, which costs around $160 in most counties. Additionally, you will need to publish your new DBA in a local newspaper for two weeks to officially claim your DBA.

Those who desire a more detailed explanation of the Georgia DBA acquisition process can check out this detailed guide.

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.

Sole proprietors who sell goods or products, for instance, will need to register to pay sales and use tax. To determine whether your business will need to pay certain types of business-specific taxes, you should register your business with the Georgia Tax Center, which will allow you to sign up for any business-related taxes that you need to pay.

Obtain Business Licenses and Permits

There isn’t a requirement in Georgia 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.

In Georgia, businesses involved in a number of different industries will need some kind of license or permit, so you should use the Secretary of State’s professional license page and this agency search to determine whether you need to obtain any of these credentials.

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

Most cities or counties in Georgia – including major cities like Atlanta, Augusta, Columbus, Savannah, and Athens – will require you to obtain some kind of business license, so you should ensure that you check your local requirements.

What Is a Georgia 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.