How to Start a Sole Proprietorship in Georgia

Last updated: March 8th, 2024
We might receive compensation from the companies whose products we review. We are independently owned and the opinions here are our own.

Starting a business is exciting, but if you’re new to the entrepreneurial world in Georgia, you might have some questions. For starters, what’s the process to start a business? If you want to get started right away with little fuss, a sole proprietorship could be a good fit. Read on to learn more about becoming a sole proprietor and how it differs from other business structures.

Jump to

What is a sole proprietorship?

A sole prop is an unincorporated business with one owner. There’s no required paperwork to become a sole proprietor. It simply starts when you make your first sale.

Since this type of small business requires no official registration process, it’s a common choice for new startups or owners who are interested in testing a business concept before committing to it.

Examples of a sole proprietorship

Sole proprietors can be any type of small business, but it’s usually a small business or a home-based business. A freelance writer or graphic artist can be sole proprietors, as can online store owners, local crafters selling at community markets, or a hair stylist or accountant with a small storefront.

What qualifies your business as a sole proprietorship? 

A sole proprietorship exists if a single owner sells goods or services. With this type of business entity, the owner and the business are considered one and the same.

You can create a business name if you’d like, and you should explore necessary business licenses and permits. To do so, call your county or city clerk.

Beyond that, you don’t need anything to “qualify” as a business.

Sole prop vs LLC

A sole proprietorship is a single-owner Georgia business that does not register with the state. Meanwhile, a limited liability company (LLC), is a form of business that is registered with the state, has annual filing requirements, and offers personal liability protection to the owner.

Who is it best for?

A sole proprietorship is best for entrepreneurs who are interested in testing a business idea or small businesses that don’t assume a lot of liability.

Freelancers looking to start a small writing firm or a graphic designer interested in working with a handful of clients are ideal sole proprietorship business ideas. Any kind of freelance work, consulting, or remote-based work could benefit from this kind of business type too.

How to set up a sole proprietorship in Georgia

Setting up a sole proprietorship in Georgia is simple. Really, all you have to do is begin business activities, but there are some things to consider before you sell your first product or work on your first project. Here’s a look at what you should do to get a Georgia sole proprietorship set up:

Is there any formal paperwork filed to establish this type of business?

No. While business owners who choose a limited liability company or corporation as a structure do file formation documents with the state, sole proprietorships do not. The absence of formal registration is an attractive perk to business owners who are just starting out.

Naming your business

You can use your own name as a business name, or you can file a business name with the state.

Using your own name

If you want to name your business, you can. However, this is optional. If you choose not to pick a name, your business name is the same as your own name.

Setting up a DBA

If you do want a business name, you should explore the names of existing businesses on the Georgia Secretary of State website. Search for the name that you’d like to use to see if it’s already in use. If it is taken, consider a new name.

If it’s available, you can file a DBA, or doing business as. It’s sometimes called a trade name or a fictitious name too. To file the name, you’ll file paperwork through your county clerk of the superior court.

Once filed and approved, you can operate under the business name.

Register with the Georgia Tax Center

The state of Georgia requires sole proprietors to register with the Georgia Tax Center. You’ll need your social security number and your most recent federal adjusted gross income to sign up. The state has several helpful resources on its government website, including a video that explains how to register with this tax agency.

State or county licenses 

Check with your county clerk’s office to see if your business needs any licenses or permits to operate. The state does not require sole proprietors to obtain a business license, but it may differ on local levels, and specific types of industries, may need permits to operate.

Open a business bank account

You might consider opening a business checking account to keep your personal and business finances separate. When you go to file taxes, you’ll need to quantify your sales and expenses, so it’s easier if everything goes through a business account.

If you want to open a business account, you’ll need an EIN, or employer identification number. This IRS-issued ID number is provided online and is also required if you plan to hire employees.

If you decided to file a DBA, you’ll use your DBA name on your bank account.

Georgia taxes 

As a new business, you’ll notice slight changes to your personal taxes. Your business won’t file taxes, instead, the income you generate will pass through to your personal taxes, where you’ll pay federal taxes and state taxes on the income.

Sole proprietorships aren’t subject to specific business taxes, but you will file a Schedule C for tax purposes.

You can use an accountant to file your taxes, but tax software is equipped to help taxpayers, including sole proprietors, file their own taxes online.

Pros

  • Don’t require formal registration or official business formation documents.
  • Give solo owners a chance to test a business idea with little setup.
  • Offer owners the chance to hire employees.
  • Won’t complicate your personal taxes.

Cons

  • Do not offer personal liability protection.
  • Aren’t (usually) eligible for grants or funding.
  • Won’t protect personal assets against lawsuits or business debts.

FAQs

Should a sole proprietor get an EIN?

An employer identification number is issued by the IRS. As you might guess, the ID number is used to file income taxes (and it is sometimes called a tax ID), but it has other uses too. Sole proprietors also need an EIN to open a business bank account, get a business credit card, and hire employees.

What does an LLC offer that a sole proprietorship doesn’t?

The biggest perk of an LLC is that it offers limited liability protection. If your business is sued or racks up business debt, your personal assets are kept separate and aren’t used to bail out the business.

Are there any filing fees associated with setting up a sole proprietorship in Georgia?

No. There are no registration forms to file with the state, so there are no filing fees. Sole proprietorships aren’t required to file annual reports either, which come with annual filing fees.

To start a Georgia business, do you need a lawyer and accountant?

You don’t need either to start a business, but legal advice and financial advice on tax returns are always welcome. While you may not use these services at the beginning, as your business grows you may want a law firm and CPA to reach out to.

Should sole proprietors have a business plan?

A business plan helps you think through your business. You’ll explore your target audience, products, pricing, and revenue in a business plan, which is helpful information for any self-employed person.

Do you need a registered agent if you start a sole proprietorship?

A registered agent is a person willing to accept official business notifications for your business. While LLCs and corporations list a registered agent on their formation documents that are filed with the state, a sole proprietorship does not.

Who can be a sole proprietor?

Anyone. If you have a business idea and want to sell goods or services as a single owner of a small business, you can be a sole proprietor. In Georgia, sole proprietorships are unincorporated, which means they’re not registered with the state and are easy to set up.

Find out how to start a sole proprietorship in your state

Click below to get started