When you start a sole proprietorship, your legal name is your business name. You have the option to create a separate business name, referred to as doing business as (DBA). If you use your full legal name for your business, no further action is required. You may operate without registering. However, many sole proprietors use a trade name for marketing or to keep personal identities separate. If you plan to use any name other than your personal name, you’ll register a DBA name.
The sole proprietorship suits entrepreneurs confident they do not want partners now or later. We highly recommend a separate account for your business.
If you register a DBA name, this strategy may work for you. Registering your sole proprietorship as a DBA attracts business at a lower cost without forming an LLC. You can run multiple small businesses as a sole proprietor when you register a DBA for each.
Most sole proprietorships in Nova Scotia register with the Registry of Joint Stock Companies. Use their Sole Proprietor Registration Form. You don’t have to register if:
- You are registered in New Brunswick
- Use only your name
- Engage in farming/fishing
A sole proprietorship has one owner who has not registered as a corporation. As the only owner, you make all decisions and register at lower cost. However, sole proprietorships don’t protect assets, so you’re liable for claims/judgments.
As an “independent contractor" not incorporated, you will file quarterly estimated taxes and a Schedule C. You’re personally liable for debt, losses, and liabilities. It’s difficult to partner with investors as no stock ownership.
FAQs
Do I need to file as a sole proprietor?
Yes, if you start a business alone and you are not incorporated, you are considered a sole proprietor by default.
Does a sole proprietor need an EIN?
An Employer Identification Number (EIN) is not mandatory for sole proprietors unless they have employees or meet other criteria as set by the IRS.