“To open a shop is easy, to keep it open is an art” – Chinese Proverb

[Starting a Business] An entrepreneur forms and operates a new business either by himself or co-founds the business with others. Starting a business requires the individual or group to make a decision on whether the business should operate as one of the major forms of business organization or under some other available legal business form. Often times, the decision comes down to the ease and cost of formation as the main factor. When the ease of setup is a major factor many entrepreneurs choose to start out in business as a sole proprietor. This article will discuss how entrepreneurs start and do business as a sole proprietor.

Formation

There are not any formalities when creating a sole proprietorship since this business type is not a separate organization. In fact, this type of business is easy to create without any requirements for approval from the federal or state government. There are some local governments that require sole proprietorships to obtain licenses to do business within the city.

“Doing Business As” – d.b.a.

The acronym for “doing business as” is d.b.a. The term “doing business as” refers to the option that a sole proprietor has to operate under the name of the sole proprietor or a trade name. This practice is evidenced by the following language: “Bill Gates d/b/a Software Company of the World.” In this example, the well- known creator of the software can operate a sole proprietorship under the name “Bill Gates” or under the trade name “Software Company of the World.” Operating under a trade name is commonly designated as d.b.a. (e.g., Bill Gates, doing business as “Software Company of the World”).

Most states require all businesses that operate under a trade name to file a fictitious business name statement (or certificate of trade name) with the appropriate government agency. Included in the statement are (1) the name and address of the applicant, (2) the trade name, and (3) the address of the business. Also, the state will require a notice of the trade name to be published in a newspaper of general circulation serving the area in which the applicant does business.

These requirements are set on purpose to disclose the actual owner’s name to the community. A fine can result from noncompliance to this requirement. Some states prohibit violators from maintaining lawsuits in the state’s courts.

Although a sole proprietorship can grow into a substantial size, most are small. Many small businesses and a few large ones operate in this way. In a sole proprietorship, the owner and the business is one in the same; thereby, making it the simplest form of starting a business and the most common in the United States. Be sure to observe and follow any local requirements that relate to starting a business as a sole proprietor as you “Create Your Own Lane” in business success.