What is a sole proprietorship?
Sole proprietorship or sole ownership is the oldest form of business setup. Only one owner manages the affairs of the business such as, Capital or funds, assets management, working capital, and operations. This is the quickest and easiest business setup. It can start with a nominal capital depending on the nature of the business. Normally, small sized businesses have sole ownership and this is the right choice to start a new business. It is the most suitable form of business for the beginners.
Benefits of Sole proprietorship
- The profit of the sole proprietorship is not subject to double taxation, and such profit is taxed only once in the income tax return of the sole owner
- It is very simple business setup and has no legal filing formalities like in companies and corporation.
- It is very easy to start and dissolve any sole ownership business.
Disadvantages of Sole proprietorship
- Sole has unlimited liability for the debts of the business. Liability of sole owner is not limited and he or she is responsible for all the debts and obligations of the business.
- Due to small scale business it was unable hiring the expense of business experts.
- Due to limited capital the growth of the business remains limited.
Steps to establish sole proprietorship business in Rhode Island
Research, analysis and feasibility plan:
Every good business man always does reasonable research and after analyzing the all factors prepare a feasibility report before starting any business.
This process involves the market research and evaluation of future benefits and expenditure for the business. You may take help and support form following state and federal departments.
- Providence Economic Development Partnership: www.providenceri.com/economic-development
- RI Commerce Corporation: www.commerceri.com
- U.S. Small Business Administration: www.sba.gov
- SCORE (Counselors to America’s Small Business): www.score.org
Chose a Location for your sole proprietorship business and zoning clearance
Selecting a location is a very important step. You must have to consider the scope of your business activities and legal and zoning barriers for your business activities. Be sure to check that your proposed business use is consistent and compliant with local zoning laws.
Choose and registration of business name:
You may choose any name for your business, in Rhode Island you have contact with relevant departments of the town or city to register business name of sole proprietorship rather than state office. The clerk of the city or town will issue a certification of registration after checking the name availability in his area and may charge fees for registration if applicable in that city or town.
Trade Mark Registration:
You may register a trade mark with Rhode Island State to protect your business name within the state and may also register with federal level to protect in all states of the US. For such trade mark registration, you have to choose distinguishable, and unique name for your business.
Obtain Federal Tax Identification Number
Contact with Internal revenue service (IRS) to obtain Tax identification number (TIN) or Employer Identification number (EIN) if you will have employees.
Registration with Rhode Island Division of Taxation
You also have to register with Rhode Island Davison of taxation for income tax purpose and followings
- Permit to make sale at retail in Rhode Island
- Income tax withholding account with misc withholdings
- Rhode Island Unemployment insurance account
- Rhode Island job development fund tax.
Taxation at city level in Rhode Island
Following taxes may apply at city level at Rhode Island
- Property or Real estate Taxes: (if you own business property in Rhode Island).
- Tangible Taxes: (Tangible taxes are assessed on the physical assets and inventory of your business).
Obtain necessary Licenses and Permits
- Visit www.sos.ri.gov/business for more information or contact the Division of Business Regulation. You have to obtain relevant licenses and permit according to nature of your business. Such as: Sunday retail sales, liquor licenses, entertainment licenses, peddler’s licenses or other special licenses.
- If you are considering opening a restaurant, nightclub, market or convenience store – also check with the Rhode Island Department of Health for any special requirements.
Other Auxiliary steps
- Open a Bank Account to make your payment and deposit safe and expedite
- Get insured your business to secure your unlimited liability toward the business debts and obligations
Where to file a DBA in Rhode Island?
- Sole Proprietorship DBA is filed with the City, Town Clerk Office.
- Corporation, LLC, LLP, LP DBAs are filed with the Rhode Island Secretary of State office.
