Nevada Sole Proprietorship

How to Become a Nevada Sole Proprietor

In Nevada, becoming a sole proprietor is easy. There’s no formal setup or fees. Just start working, and you’re good to go. However, consider some extra steps along the way, even though they’re not strictly necessary. Many sole proprietors find them beneficial.

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.

To acquire a DBA (sometimes referred to as a “fictitious business name” or “fictitious firm name”) in Nevada, you must first verify that the name you intend to use has not been previously claimed by another company. To do so, enter the name into the Nevada Business Search.

If the name is available, you may proceed with the acquisition process by filing the appropriate form. The document varies from county to county, and can be obtained from the respective office of the county clerk either digitally or in person.

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.

Although Nevada sole proprietorships are not subject to corporate income tax or personal income tax, there are other taxes you may need to pay depending on what goods or products are sold. For example, sole proprietorships which have employees and report gross wages to the Nevada Employment Security Division must pay a modified business tax (MBT).

To discover which state taxes your sole proprietorship is responsible, it’s recommended that you register online with the State of Nevada Taxation Department.

Obtain Business Licenses and Permits

There isn’t a requirement in Nevada 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 addition to your standard State Business License, your sole proprietorship may also require several industry-specific permits and licenses. To determine which licenses apply to your business, use Nevada’s New Business Checklist to determine both your state and local licensing needs.

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

This can be done by visiting Nevada’s New Business checklist. Alternatively, to discover which local licensing requirements your sole proprietorship may be subject to, you may select your company’s location and go from there.

What Is a Nevada 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.