How to Start a Sole Proprietorship in Florida

What is a sole proprietorship?

A sole proprietorship is a small or unincorporated business owned by one person, which is known as the sole proprietor. In most states, sole proprietorships are unregistered and run solely by one individual. 

Sole proprietorships can also hire employees if they obtain an employer ID number from the IRS, but if you don’t want to go through the process of hiring an employee because you don’t need full-time assistance, you can always hire an independent contractor instead. Instead of needing a W-2 form for your employee, you can give them a 1099 form instead for tax purposes. 

What qualifies your business as a sole proprietorship?

As long as a business is unincorporated and is solely owned by one person, it can qualify as a sole proprietorship. Two or more people owning a business means it can qualify as a corporation, LLC, or general partnership.  

Who is it best for?

A sole prop is best for new business owners who want to test out the waters first. Without needing too much capital or paperwork, you can start a small business and bring your ideas to life. Although it might be a little riskier than opening an LLC that provides protection, a sole prop is best for people with low capital, as you can always expand and form an LLC later. 

Let’s say you already have a feasible business idea. It doesn’t have to be big at first, and you can start without quitting your day job. You can start with an idea based on your skills and what your community needs. After solidifying the business structure, products, business activities, and services, you are already on your way to becoming a sole proprietor.

How to start a sole proprietorship in Florida

When filing for a sole prop in Florida, there is not a lot of paperwork involved. Because you can start operating your business without registering with the Secretary of State, all you need is to obtain the necessary business licenses related to your business.

A Florida sole proprietorship doesn’t need to register with the state. However, there are a few things you need to do locally, such as getting the appropriate licenses, permits, zoning clearances, etc. You can operate a sole prop in Florida without holding annual business meetings and don’t need to appoint a board of directors.

Naming your business

When choosing a name for your business, you may want to select one that fits the nature of your business. With an appropriate name that describes what your business is all about, you have a higher chance of getting people more interested. 

Using your own name

Sole proprietorships usually do business under your own name. However, you still have the option to file for a trade name if you wish to do business under a different name. Although you don’t need to register your business with the state, you can file for a DBA or fictitious name to legally operate under a different name. 

Setting up a DBA

Another option is to file for a DBA name. The fictitious name registration in Florida is quite easy. All you need to do is come up with an appropriate name for your business and register it for a DBA. Although it is not required, a DBA name is ideal for most small businesses. 

To see if your name is available, you can check the Florida Department of State Database and file the name online here. You can also file for a trade name at your local county clerk’s office, but be sure to fill out this trade name form first. 

How to Check if a Business Name is Taken

State licenses

Some businesses require licenses and permits to operate legally. For example, bars and convenience stores require a liquor and tobacco license to sell alcohol and tobacco. Other professions also require licenses, such as accountants, barbers, tattoo artists, etc.

If you want to know what types of licenses your business might need, you can check the Florida Division of Corporations list using the Sunbiz portal on the Florida Department of State website. 

Florida taxes

When filing taxes with the IRS as a sole prop, there is no need to file a separate tax return for your business. Instead, the business owner will only need to file federal tax under their legal name and social security number with no distinction between the business and the owner. 

Unlike LLCs and any other incorporated business entity, a sole proprietorship is entitled to all profits. However, they will also be responsible for the business’s debts, liabilities, and losses. If the business goes bankrupt and falls into debt, the sole proprietor will have personal liability and pay with their personal assets.

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