How to set up a sole proprietorship in ohio

Greater liability

As a sole proprietor, you’re personally liable if the business gets sued or incurs debts.

Taxes

Sole proprietors must report business profits as personal income, and pay self-employment tax.

Difficulties raising capital

It’s harder to attract investors because you have no partners, shares, or membership interests.

How you can build your business

DBA (doing business as)

Use a name other than your own to do business, open a bank account, and build a brand.

Business licenses

Make sure you have all required permits and licenses to run your business legally.

Liability protection

Operate as an LLC to protect your personal assets if your business ever gets sued or incurs debts.

Legal advice

Subscribe to a Business Advisory Plan, and get help from a network attorney.

Do I need to use my own name for my sole proprietorship, or can I run the business under another name?

As a sole proprietor, by default, the legal name of your business is your own name. But you can choose to operate the business under another name, known as a “fictitious business name” or “doing business as” (DBA). Most states require you to file an application for your DBA.

Do I need to register my sole proprietorship with the government?

You don’t have to register or file any paperwork with the federal government to form a sole proprietorship. If you go into business without setting up another business structure, then you’re automatically considered a sole proprietor if you’re the sole owner.

However, some states and counties may require you to obtain business licenses and/or permits before you can lawfully operate, Also, if you want your business to have a name that’s different from your own legal name, then most states will require you to file for a DBA.

Can I open a business bank account with a sole proprietorship?

Even if your business is a sole proprietorship, you should have a separate business bank account to help separate your business and personal income and expenses. This will help you properly report your business income on your personal tax returns. Most banks will allow you to open an account for your sole proprietorship using your social security number.

If you plan on doing business under a fictitious name (“DBA”), most banks will require proof of the filed DBA before they will open the account.

If my business grows, can I change my sole proprietorship into a corporation or LLC?

You can always choose to restructure your business. Whenever you decide your business might be outgrowing its status as a sole proprietorship–whether you’re looking to take on partners or investors, or you want the benefit of different tax options and liability protection–we have resources to help you find the business structure that’s right for you.

Do I need an EIN (tax ID) if I file a DBA?

Ask an attorney

Get the right guidance with an attorney by your side.

How to set up a sole proprietorship in ohio

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Our refund policy:

We do right by you—so we’ll refund our fee within the first 60 days of purchase if you’re unhappy with our services. Call or email us, and we’ll process your refund within 5 business days.

What it doesn’t cover:

We can’t refund third-party processing fees (e.g. paid directly to our service partners or to facilitate fulfilling your order like courier fees) once you make a purchase. And, we can’t refund filing fees once we submit your paperwork to the government. Attorney fees paid directly to lawyers (and not through our legal plans) are not covered.

When it applies:

We can’t guarantee specific legal outcomes when you use our products or services. For example, a trademark application might be filled out correctly but still get rejected by the government for reasons beyond our control. We can only refund our fee for issues we’re directly responsible for. So if you purchase something and later change your mind, we can’t issue a refund.

SatisfacciГіn 100 % garantizada

Nuestra polГ­tica de reembolsos:

Hacemos lo correcto para usted, por lo tanto, si no estuviese satisfecho con nuestros servicios, le devolveremos el dinero en los primeros 60 dГ­as de la compra. LlГЎmenos o envГ­enos un correo electrГіnico y procesaremos su reembolso en el transcurso de 5 dГ­as hГЎbiles.

Lo que no cubre:

No podemos reembolsar los gastos de procesamiento de terceros (por ejemplo, los que se pagan directamente a nuestros socios de servicios o para facilitar el cumplimiento de su pedido, como los gastos de mensajerГ­a) una vez que hubiese realizado una compra. Y no podemos reembolsar los gastos de procesamiento una vez que hubiГ©semos presentado la documentaciГіn al gobierno. Los honorarios que se pagan directamente a los abogados (y no a travГ©s de nuestros planes legales) no estГЎn cubiertos.

Cuando se aplica:

No podemos garantizar resultados legales especГ­ficos cuando usara nuestros productos o servicios. Por ejemplo, una solicitud de marca comercial puede completarse en forma correcta, pero, de todas maneras, ser rechazada por el gobierno por razones que trascienden nuestro control. Solo podemos reembolsar nuestros honorarios por las cuestiones de las que somos directamente responsables. Por lo tanto, si comprase algo y luego cambiase de opiniГіn, no podemos hacerle un reembolso.

How to set up a sole proprietorship in ohio

When a business owner is starting out, operating as a sole proprietor often makes sense. As the business grows, switching from sole proprietorship to LLC could be a wise choice. Learn how to convert from sole proprietorship to LLC.

Sole proprietorship vs. LLC: What’s the difference?

It can be hard to know if changing from a sole proprietorship to an LLC is right. Take a look at these key points on each business structure to help you decide.

Sole proprietorships are…

  • Owned by one person
  • Easy and affordable to form
  • Considered the same legal entity as the owner

With a sole proprietorship, you are personally responsible for all business losses, debts, and liabilities.

Limited liability companies (LLCs) are…

  • Owned by one person or more (called members)
  • Moderately easy and affordable to form (in most states)
  • Considered different legal entities than the owners

LLCs combine aspects of corporations and partnerships. An LLC separates business and personal liabilities, so your assets are protected and owners not liable for business debts. There is also a shared tax responsibility between members, like a partnership.

How to change from sole proprietor to LLC

Converting a sole proprietorship into an LLC can help you grow your business and protect your personal property. Follow these steps to make the transition.

1. Check your business name

When you are converting a sole proprietorship to an LLC, you need a unique business name. Your current business name might already be registered to another LLC in your state. If that’s the case, you cannot operate as an LLC under that name, even if you’ve been using it as a sole proprietorship.

Check if the name is available by contacting your state’s secretary of state office. Many states have an online database for registered business names. You can also have a legal professional help you propose a name for your LLC.

Once you’re sure no one in your state uses your business name, make sure it doesn’t infringe on anyone’s trademark. Use the United States Patent and Trademark Office’s database to search trademarks.

You must include “Limited Liability Company” in your business name. Or, you can use an abbreviation like “LLC,” “Ltd.,” or “Liability Co.”

Usually, you don’t need to register your LLC name. The name is automatically registered when you file paperwork to form the LLC. State rules differ, so double check with your state.

2. File articles of organization

To form an LLC, you must fill out an official form and send it to your state’s filing office. Each state has different requirements for the articles of organization.

It is a short, simple document that outlines details about your business. Information on the articles of organization include:

  • LLC’s name
  • Address
  • Names of owners

You need to pay a fee to submit your articles of organization. Most submission fees are about $100, but some states charge more.

The articles of organization usually require a registered agent to receive legal papers. If you are the sole owner of the LLC, you are the registered agent. If you have a multi-member LLC, you will need to appoint one member as the registered agent.

3. Write an LLC operating agreement

An LLC operating agreement sets the rules for ownership and operations. This document maps out how the business will be managed. The operating agreement includes details about the LLC members’ rights and responsibilities, voting power, and portions of profits and losses.

You don’t have to submit an operating agreement to any government or legal organization. But if you have more than one member, it’s a good idea to create one. An LLC operating agreement reduces conflict between members.

4. Announce your LLC

Some states require you to publish a public notice stating that you intend to form an LLC. You can publish the announcement in a local newspaper.

You might need to publish the notice several times and submit written proof to the LLC filing office. Check with your state to see the exact requirements for publishing a notice.

5. Apply for a new bank account

When you form an LLC, you create a new legal entity. The business has many of the same rights as a person, including being able to own property and open a bank account.

Opening a bank account under the name of the LLC helps you separate business and personal funds. A separate business bank account helps you protect personal assets, keep records, and report taxes.

6. Get business licenses and permits

You need to register new business licenses and permits for your LLC. Check with your state to find out which licenses and permits apply to your business. Licenses you might need include a business license, seller’s permit, and zoning permit.

You must apply for a new Employer Identification Number (EIN) with the IRS. This is true even if you already have an EIN for your sole proprietorship.

How to set up a sole proprietorship in ohio

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  2. Business Formation Guides
  3. How to File a DBA
  4. How to File a DBA in Ohio

Filing an Ohio DBA, also known as a trade name, is a simple legal process that you complete with the Ohio Secretary of State.

Follow the steps below to complete your Ohio Trade Name Registration.

Our How to File a DBA in Ohio guide will help you get started on branding your small business.

A DBA is used for branding purposes. A DBA isn’t a type of business structure and won’t protect your personal assets.

Forming an LLC is the best choice for most small businesses. Visit our DBA vs LLC guide to learn what types of businesses need limited liability protection.

How To Use This Guide

Use our free guide below to file for a DBA in Ohio:

Use A Professional Service

A professional service will handle filing your Ohio DBA, allowing you to focus on the other needs of your new business.

MyCompanyWorks ($99 + state fee) for a personalized DBA service.

Swyft Filings ($99 + state fee)

How To Set up a DBA in Ohio

Step 1: Start With an Ohio DBA Business Name Search

First, note that there is a difference between a “trade name” and a “fictitious” business name in Ohio. Trade names must be distinguishable from other business names, while fictitious names don’t have to be.

Because of this, trade names are protected by the state from being used by other businesses in that state. Fictitious names are not. This guide will focus on Ohio Trade Name Registration.

If you haven’t already, head over to the Ohio Secretary of State website to make sure your trade name isn’t taken by another registered Ohio business. Your name can be similar to other business names, but it’s still a good practice to create a unique name.

TIP: Our business name generator tool is a great resource for entrepreneurs who are still working to create the perfect business name or website address. You can also use our free logo generator tool to make a logo yourself! No design experience necessary!

In Ohio, your trade name should not include:

  • Any business entity suffix, such as LLC, Incorporated, Corp., etc unless the business is actually an LLC, corporation, or etc.
  • Any terms given to financial institutions, including: “bank,” “banc,” “banco,” “banque,” “banker, “trust company,” “savings and loan association,” “savings bank,” “credit union” or other similar words.

You can read more about Ohio business name guidelines here.

Next, a quick search on the U.S. Trademark Electronic Search System will tell you whether someone else has already trademarked your business name.

Now would be the perfect time to make sure there’s a web domain available for your DBA as well.

Find a Domain Now

Powered by GoDaddy.com

After registering a domain name, consider setting up a professional email account (@yourcompany.com). Google’s G Suite offers a business email service that comes with other useful tools, including word processing, spreadsheets, and more. Try it for free

Step 2: Register Your DBA with the Secretary of State

In Ohio, you register your DBA with the Secretary of State. You can file online at Ohio’s online business portal or you can complete the name registration form.

The application will ask for your new DBA name and legal information about your business, such as:

  • Whether you are filing for a trade name or a fictitious business name
  • The business structure of the applicant (partnership, LLC, etc.)
  • General nature of the business
  • Business owners’ names and addresses

A DBA does not offer any legal protection for your personal assets in the event that your business is sued. For more information on setting up a limited liability company, visit our How to Form an LLC page and select your state.


Submit Your Ohio Trade Name Registration Form Online


Submit Your Ohio Trade Name Registration Form By Mail

Secretary of State
P.O. Box 670
Columbus, OH 43216

Secretary of State
P.O. Box 1390
Columbus, OH 43216

Fees

  • $39 Filing Fee
  • $100 additional for expedited (two business days) processing
  • $200 for 1-day processing
  • $300 for 4-hour processing


Manage Your Ohio DBA


DBA Questions

Call the Ohio Secretary of State: (614) 466-3910


Renew Your DBA with the State

Your Ohio trade name must be renewed every five years. The renewal fee is $25. You can complete the process online or mail the completed form to:

Secretary of State
P.O. Box 670
Columbus, OH 43216

Secretary of State
P.O. Box 1390
Columbus, OH 43216


Change Your DBA

To make changes to your certificate of assumed name, complete the change of registrant name form. Submit the form online or mail it to:

Secretary of State
P.O. Box 670
Columbus, OH 43216

Secretary of State
P.O. Box 1390
Columbus, OH 43216


Withdraw Your DBA

To cancel your trade name, complete the name reservation/transfer/cancelation form. The fee is $25. File the form online or mail it to:

Secretary of State
P.O. Box 670
Columbus, OH 43216

Secretary of State
P.O. Box 1390
Columbus, OH 43216

Need Help Filing Your DBA?

Have A Professional Service File Your DBA For You

A professional service will handle filing your DBA on your behalf, allowing you to focus on the other needs of your new business.

We recommend using MyCompanyWorks ($99 + state fee) for a personalized DBA service.

Greater liability

As a sole proprietor, you’re personally liable if the business gets sued or incurs debts.

Taxes

Sole proprietors must report business profits as personal income, and pay self-employment tax.

Difficulties raising capital

It’s harder to attract investors because you have no partners, shares, or membership interests.

How you can build your business

DBA (doing business as)

Use a name other than your own to do business, open a bank account, and build a brand.

Business licenses

Make sure you have all required permits and licenses to run your business legally.

Liability protection

Operate as an LLC to protect your personal assets if your business ever gets sued or incurs debts.

Legal advice

Subscribe to a Business Advisory Plan, and get help from a network attorney.

Do I need to use my own name for my sole proprietorship, or can I run the business under another name?

As a sole proprietor, by default, the legal name of your business is your own name. But you can choose to operate the business under another name, known as a “fictitious business name” or “doing business as” (DBA). Most states require you to file an application for your DBA.

Do I need to register my sole proprietorship with the government?

You don’t have to register or file any paperwork with the federal government to form a sole proprietorship. If you go into business without setting up another business structure, then you’re automatically considered a sole proprietor if you’re the sole owner.

However, some states and counties may require you to obtain business licenses and/or permits before you can lawfully operate, Also, if you want your business to have a name that’s different from your own legal name, then most states will require you to file for a DBA.

Can I open a business bank account with a sole proprietorship?

Even if your business is a sole proprietorship, you should have a separate business bank account to help separate your business and personal income and expenses. This will help you properly report your business income on your personal tax returns. Most banks will allow you to open an account for your sole proprietorship using your social security number.

If you plan on doing business under a fictitious name (“DBA”), most banks will require proof of the filed DBA before they will open the account.

If my business grows, can I change my sole proprietorship into a corporation or LLC?

You can always choose to restructure your business. Whenever you decide your business might be outgrowing its status as a sole proprietorship–whether you’re looking to take on partners or investors, or you want the benefit of different tax options and liability protection–we have resources to help you find the business structure that’s right for you.

Do I need an EIN (tax ID) if I file a DBA?

Ask an attorney

Get the right guidance with an attorney by your side.

How to set up a sole proprietorship in ohio

Call an agent at (866) 738-2618 (866) 738-2618

Mon-Fri: 5 a.m.-7 p.m. PT
Weekends: 7 a.m.-4 p.m. PT

Our agents are based in the U.S.

Get helpful tips and info from our newsletter!

Thank you for subscribing to our newsletter!

© LegalZoom.com, Inc. All rights reserved.

We are not a law firm, or a substitute for an attorney or law firm. Use of our products and services are governed by our Terms of Use and Privacy Policy.

100% Satisfaction Guarantee

Our refund policy:

We do right by you—so we’ll refund our fee within the first 60 days of purchase if you’re unhappy with our services. Call or email us, and we’ll process your refund within 5 business days.

What it doesn’t cover:

We can’t refund third-party processing fees (e.g. paid directly to our service partners or to facilitate fulfilling your order like courier fees) once you make a purchase. And, we can’t refund filing fees once we submit your paperwork to the government. Attorney fees paid directly to lawyers (and not through our legal plans) are not covered.

When it applies:

We can’t guarantee specific legal outcomes when you use our products or services. For example, a trademark application might be filled out correctly but still get rejected by the government for reasons beyond our control. We can only refund our fee for issues we’re directly responsible for. So if you purchase something and later change your mind, we can’t issue a refund.

SatisfacciГіn 100 % garantizada

Nuestra polГ­tica de reembolsos:

Hacemos lo correcto para usted, por lo tanto, si no estuviese satisfecho con nuestros servicios, le devolveremos el dinero en los primeros 60 dГ­as de la compra. LlГЎmenos o envГ­enos un correo electrГіnico y procesaremos su reembolso en el transcurso de 5 dГ­as hГЎbiles.

Lo que no cubre:

No podemos reembolsar los gastos de procesamiento de terceros (por ejemplo, los que se pagan directamente a nuestros socios de servicios o para facilitar el cumplimiento de su pedido, como los gastos de mensajerГ­a) una vez que hubiese realizado una compra. Y no podemos reembolsar los gastos de procesamiento una vez que hubiГ©semos presentado la documentaciГіn al gobierno. Los honorarios que se pagan directamente a los abogados (y no a travГ©s de nuestros planes legales) no estГЎn cubiertos.

Cuando se aplica:

No podemos garantizar resultados legales especГ­ficos cuando usara nuestros productos o servicios. Por ejemplo, una solicitud de marca comercial puede completarse en forma correcta, pero, de todas maneras, ser rechazada por el gobierno por razones que trascienden nuestro control. Solo podemos reembolsar nuestros honorarios por las cuestiones de las que somos directamente responsables. Por lo tanto, si comprase algo y luego cambiase de opiniГіn, no podemos hacerle un reembolso.

Contents
Need help onboarding international talent?

The entire African continent is a vast market that is only beginning to blossom. Nigeria is no different – this big and important country is a continental hub of growing investments in many sectors: agriculture, trade, fashion, digital media and advertising, blogging, and many others.

If you come armed with a solid idea, you can start your own business in Nigeria in no time. Whether you plan to launch a locally oriented company or work as an independent contractor for foreign clients, this article will help you grasp the basics of starting a business in Nigeria.

Disclaimer: This article is not a substitute for legal advice. Please always check official websites or seek legal advice before you take action.

Sole proprietors in Nigeria

In Nigeria, the most commonly registered businesses are sole proprietorships, sometimes also known as sole traders. A sole trader is a person who owns the business, meaning a natural person and not a legal entity. As the owner of a sole proprietorship, you can enjoy the business’s profits but are also responsible for any losses or debts. It is an excellent option for starting your business from scratch and testing the waters in the market.В

A sole proprietor is the most common business form in Nigeria because the registration process is incredibly easy and requires very few steps.В

To set-up a sole proprietor, you can either use the online method (on the web portal of the Corporate Affairs Commission) or go to the CAC office nearest to you.

Business Name Registration

You need to register a business name for your business activity. Upon doing so, you will receive a business name registration certificate, which you will need to open a bank account or obtain a tax clearance for your business.В

As we mentioned above, the Corporate Affairs Commission (CAC) is the authority in charge of business name registration.В

Before registering, check if someone else is already using the business name you planned on.В

To search, follow the CAC guideline for searching and registering your business name. If you prefer to take these steps face to face, you can walk into any of the CAC offices and obtain the Reservation of name form.

It takes about two weeks for the CAC to complete the request, and it will cost you N500.

Taxes for sole proprietors in Nigeria

Sole proprietors in Nigeria don’t pay any corporate income tax, since they are not legal entities. Instead, they only pay the PIT – Personal Income Tax. The individual’s income in any form (salary from employment or earnings as a sole trader) is covered in the Personal Income Tax.

The Personal Income Tax Act (PITA), and its amendment in 2011, divided personal income taxpayers into two groups: the employees and the self-employed. The area of interest for a sole trader is the latter.

Sole traders are responsible for filing their tax returns themselves and paying taxes when they are due, according to the articles of the Personal Income Tax Act (PITA).

All sole proprietors in Nigeria are liable to pay tax for every year of assessment on the total amount for every income source. The income includes profits made from the business, salaries, wages, fees, allowances, or any other profit gained from employment, including benefits and compensation. The tax rate varies according to the amount of income earned, and they range from 7% to 24%.

There are, however, deductibles and allowances you can use to lower the tax you owe each year. Some of the deductibles are contributions to a pension scheme, loan interests, business rent, and other costs and maintenance of any business equipment. Allowances are also plentiful, and you can see their categories and amounts here.

These are all the steps for starting your own business in Nigeria. We hope this article was a helpful first step on your journey to entrepreneurship. If you plan on working with international clients, consider using Deel.

How to set up a sole proprietorship in ohio

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There are many ways to set up your massage business structure. The best information will come from your accountant and business advisers. The Small Business Administration (SBA) has a lot of information to assist you in setting up your massage business structure.

The most common for massage businesses are being a sole proprietor or forming an LLC (Limited Liability Company). If you don’t set up a LLC or Corporation you will automatically be considered to be a sole proprietorship.

In a sole proprietorship you own the business. You can also be a sole proprietorship when you are an independent contractor for another business. You are responsible for the profits and losses as well as the success or failure of the business. You can choose a business name or just have it be under your own name. In general, you will just keep track of income and expenses and have a separate business bank account. When you file taxes you will use a Schedule C – Profit and Loss from Business. With this type of business you are personally liable if anyone gets hurt or makes a claim against your business. That will include your home and personal assets too. If you want to get loans from banks it will depend on your personal credit as compared to the value of a business. You will need a business license in your city or county. You will also have to pay Self employment tax. You usually will make quarterly tax payments.

LLC’s provide some liability protection. You don’t pay income tax but it will help protect your personal assets. You will have to file the appropriate articles and paperwork with your secretary of state and set up an operating agreement outlining the details of the business. There will be variations in each state.

A Sole proprietorship is easier to set up and deal with but doesn’t offer any personal protection. The thing though for massage therapists is that it is easy to get caught up in the business and start thinking that you and you alone are the business. You start working in the business instead of on the business and it is hard to separate you from the actual business. In that way it can bring up more challenges on the path to success. While many do just start a sole proprietorship because of the ease of setting it up, doing it with awareness can help you to separate yourself from the business.

Some of the things that you can do right from the start is to begin with the goal of selling your business in the end or at some time. The policies and procedures that you set up for your massage business will also help to keep you separate from the business enough to help keep it successful yet fulfilling.

Be sure to contact an attorney to help you set up the appropriate massage business structure. In WA State, massage practitioners will need to be a PLLC and can’t be a LLC. (according to AMTA WA attorney John Peick)

How to set up a sole proprietorship in ohio

Congrats! You’ve decided to start a business. What’s next? One of the first questions you’ll be asked is what type of business entity you’d like to conduct business under. The options include a Sole Proprietorship, General Partnership, Limited Partnership, Limited Liability Partnership, Limited Liability Company, C Corporation, S Corporation and finally a Professional Service Corporation.

In this first in a series of articles, we’ll cover the first option: Sole Proprietorship. The laws vary by state, so for the sake of this piece, we are sharing information for those doing business in New York City or State. If you intend to conduct business across state lines, depending upon the nature of how that business is conducted, you may have an obligation to file in other states.

What is sole proprietorship?

Many solopreneurs set up their businesses as a Sole Proprietorship. The definition of a Sole Proprietorship, for tax purposes, is that you own an unincorporated business by yourself. The business exists until the retirement or death of the owner. The downside of doing business as a Sole Proprietorship is that you don’t have any legal protection. If you get sued or go into bankruptcy, your personal assets, such as your home or car, are not protected.

Steps to setting up your small busniess as a sole proprietorship

An advantage of setting up your business as a Sole Proprietorship is that you don’t have to register your company unless you want to do business under a name that differs from your legal name. If you decide to call your company something besides your name, you’ll be “Doing Business As” (DBA). For example, if your name is Bob Brown and you want to name your company “Bob’s Amazing Shoes,” you’ll be required to file a Name Certificate since you’re Bob Brown DBA Bob’s Amazing Shoes.

It is not a requirement for Sole Proprietorship’s to have a Federal Employer Identification Number (EIN), though we recommend that our business clients file for one. You’ll need your EIN if you ever want to hire employees, open a business account (also strongly recommended), build your business’ credit, create a retirement plan or protect your privacy.

Next, you’ll want to set up a separate business account. We recommend using the same bank that you use for your personal account. If you anticipate using a credit card we strongly suggest you get one in the name of the business rather than using a personal credit card. You’ll also need to procure the required insurances.. Finally, we recommend hiring a professional bookkeeper.

What tax forms do I file as a solopreneur?

As a NYS/NYC resident, you may be already required to file Federal Form 1040 and NYS IT-201 (with your other income such as W-2). So in addition to all other income and losses that are required to be reported, the business income or losses will be reported on Schedule C of Form 1040 for Federal tax purposes and the same business income or loss will be reported on your NYS IT-201.

As a sole proprietor, your business income is also subject to self-employment tax, which is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners. So instead of those Social Security and Medicare taxes being withheld, you will need to pay self-employment tax with your Form 1040. Keep in mind that as a self-employed individual, you may be required to remit taxes every quarter (called quarterly estimated tax payments) if you expect to owe income tax (including self-employment tax) of $1,000 or more for a particular tax year unless you had no tax liability for the prior year. If you don’t pay enough tax through withholding or estimated tax payments by the due dates, you may be charged a penalty.

The Metropolitan Commuter Transportation Mobility Tax

The Metropolitan Commuter Transportation Mobility Tax (MCTMT) is a tax imposed on employers and self-employed individuals engaging in business within the Metropolitan Commuter Transportation District (MCTD). The MCTD includes the counties of New York (Manhattan), Bronx, Kings (Brooklyn), Queens, Richmond (Staten Island), Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester.

The MCTMT applies if a taxpayer has net earnings from self-employment allocated to MCTD that exceeds $50,000 for tax years beginning on or after January 1, 2012. The tax rate is .34% of the taxpayer’s total net earnings from self-employment. Self-employed individuals subject to MCTMT are required to remit quarterly estimated taxes.

NYC Unincorporated Business Tax

The filing of New York City Unincorporated Business Tax Return (Form NYC-202) is required by individuals and single member LLCs that carry on a trade, business, profession, or occupation wholly or partly within New York City and has a total gross income from all business regardless of where carried on of more than $95,000.
The filing of NYC UBT return doesn’t mean that you owe taxes immediately. There is full UBT credit available for NYC sourced net self-employment earnings of $100,000 or less and partial UBT credit available for NYC sourced net self-employment earnings between $100,000 to $150,000. NYC sourced net self-employment earnings of greater than $150,000 must pay the 4% UBT tax. Also keep in mind that a credit for NYC UBT tax paid is available to offset NYC income tax on a resident or part year resident.

Full-time employees or contractors

We’ll go into deeper details about this in another article, but to give a high level explanation, you’ll need to decide whether you want to hire an employee or independent contractor. If you hire an employee, you will need to provide employee ­type of benefits such as pension plan, insurance, vacation pay, etc. Intentionally misclassifying employees as independent contractors may result in being liable for criminal and civil penalties in addition to the employment taxes plus penalties and interest.

What you need to know about sales tax

If you sell tangible goods or certain services in New York, you may be liable for the collection and remittance of sales tax to the state government. This may also extend to the sales of goods and services into other states, depending upon certain criteria. This is a complicated area and requires guidance from a qualified accountant.

Next time we’ll explain which companies might want to register as a General Partnership and exactly what that entails. We’re here to answer any questions you might have related to setting up your business, taxes or anything else to help your business run smoother so you can focus on the important things.

This article was edited and reviewed by FindLaw Attorney Writers | Last updated December 21, 2018

You’ve made the leap to start your own law firm. You’ve thought about costs, practice area, and gone through all the items on your startup checklist.

Now you need to figure out how to set up your business. And not in the sense of “Where does the office furniture go?” No, now you have to make the big decision on the legal structure of your firm. This is no small matter either. The choice you make will affect many aspects of your business operations, so it is important to thoroughly research your options and make the right choice for your needs and circumstances.

So what are your options?

1. Sole Proprietorship

A sole proprietorship is perhaps the most straight-forward option. It’s a business structure where the business is owned and controlled by one person and that person is liable for any of the business’ obligations.

Some aspects of a sole proprietorship include:

  • You don’t have to file any forms with the state, though you still need to obtain any required licenses and permits.
  • Owners are personally liable for any debts incurred by the business.
  • Income from the business is reported on your personal income tax return.

According to the Small Business Administration (SBA), some of the advantages of using a sole proprietorship structure are that it is low cost, owners have control, and taxes are simplified, while the disadvantages include unlimited liability and that you have to pay self-employment taxes.

As the owner of a law firm, this may be an easier route to take to get your business off the ground and running. On the other hand, if the business is sued for for any reason, such as a slip and fall in your office or for malpractice, you could be personally on the hook for any damages (in excess of any insurance coverage that you have hopefully purchased).

2. Partnership

A partnership consists of two or more people who own and run the business. The partnership may be general or limited, and is generally governed by an agreement that sets forth the partners’ responsibilities and obligations. Limited liability partnerships (LLP) may be an option depending on your state. LLPs may be limited to certain professions, and provide some protection to the partner from personal liability for certain acts of the other partners.

  • Partners are personally liable for the partnership’s obligations (in a general partnership);
  • Partners owe fiduciary duties to each other; and
  • Taxes are paid through the partner’s individual tax returns.

The benefits of a partnership, says the SBA, include low formation costs, profits that flow through to the partners, and incentives for employees to become partners, while the downside includes joint and several liability, profit sharing, and disputes between partners over business decisions.

So if Joe Law Partner commits malpractice (or some other tort related to the partnership), or bails on a contractual obligation, you could be personally liable. That’s one good reason to pursue a limited liability partnership if it’s available in your state.

3. Limited Liability Company

A limited liability company (LLC) is a business whose members are protected from personal liability for the acts and debts of the company in the same way as a corporation, but can opt to be taxed as a partnership.

  • Members must file organization papers with the state.
  • An operating agreement governs the rights and responsibilities of the members and how the business will be run.
  • The LLC can choose to be taxed as either a partnership or a corporation.

The SBA notes that LLCs provide the benefits of limited liability and less record keeping than corporations, but members may have to deal with dissolution if a member leaves or dies, although the operating agreement can be drafted to address this situation.

Some states do not allow certain professions to operate as an LLC, so be sure to check the laws of your state.

4. Corporation

A corporation is treated as a unique entity with limited liability and perpetual existence that is owned by shareholders.

Of note with regard to corporations:

  • You must file paperwork with the state.
  • You must prepare bylaws that govern the operation of the corporation.
  • The corporation must observe certain corporate formalities.

A corporation is taxed when the corporation earns profits, and the dividends distributed to shareholders are also taxed. If the corporation meets certain requirements, it can elect to be treated as an “S Corporation” such that income and losses pass through to the shareholders.

Some states allow certain professionals to form a Professional Corporation, which allows for limited personal liability for the shareholders.

Keep in Mind.

The type of structure available to you will depend on the laws of your state, and of course, you must conform to any applicable rules of professional responsibility. It’s therefore important to research the applicable laws and ethical rules before making your final decision. You may also want to consult with an accountant or another attorney to fully understand the implications for your firm.

Get the Word Out That You’re Open for Business

Lots of decisions have to be made when you are starting your own law firm and one of those decisions is how to tell potential clients that you’re open for business. FindLaw’s suite of Integrated Marketing Solutions can help spread the word for your practice because it provides the tools necessary for a comprehensive marketing approach.