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How To Start A Nevada Sole Proprietorship

How To Start A Nevada Sole Proprietorship

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How To Start A Nevada Sole Proprietorship

Starting your first business is a significant milestone, and one of the initial decisions you’ll face is choosing the right business structure. A business structure defines how your business is organized and operates, impacting everything from your day-to-day operations to how you file your taxes.

In this guide, you’ll learn about the sole proprietorship – what it is, its advantages and disadvantages, and a step-by-step guide on how to register one in Nevada.

Related: How to start a business in Nevada

What is a sole proprietorship?

A sole proprietorship is a simple and common business structure and is an appealing choice for small business owners in Nevada. Other types of business structures, such as general partnerships, involve multiple owners sharing profits, losses, and liabilities. Corporations are separate legal entities from their owners, while Limited Liability Companies (LLCs) combine aspects of sole proprietorships and corporations.

Sole Proprietorship Advantages

  • Lowest startup costs: The sole proprietorship is the most affordable option for new businesses, with minimal registration and operational expenses.
  • Taxation: The earnings of your Nevada sole proprietorship flow directly to your personal tax return, simplifying the tax process and avoiding the double taxation that corporations can face.
  • Ease of setup: You can establish a sole proprietorship instantly just by starting to operate your business. No formal business registration is required in Nevada to create a sole proprietorship.

Sole Proprietorship Disadvantages

  • Unlimited personal liability: In Nevada, sole proprietors are personally responsible for all business debts and obligations. This means personal assets like your car or home could be at risk.
  • Difficulty raising capital: Sole proprietorships have fewer options when it comes to funding, as you cannot sell shares of your business like in a corporation or Limited Liability Company.
  • Less credibility with some customers and vendors: Sometimes, sole proprietorships are perceived as less established, which can impact potential business relationships.

If protecting personal assets is a priority, forming an LLC in Nevada might be a better choice. An LLC offers liability protection, separating personal assets from business debts. This structure is particularly beneficial for businesses with higher risk or those looking to raise capital more effectively.

Related: How to form a Nevada LLC

Steps to Start a Sole Proprietorship in Nevada

Starting a sole proprietorship in Nevada is a straightforward business formation process, as it does not require filing any legal documents with the state government to legally create the business entity. However, there are a few steps to cover to make sure the business is legally set up.

Step 1: Choose a Business Name

As a sole proprietor in Nevada, the owner can operate their business under either their full first and last name. But if they want to operate under a specific business name, registration is required.

For example, Jane Smith is starting a graphic design business in Las Vegas. Instead of having to do business under her full name, Jane Smith, she’d like to do business as “JS Designs.” In this case, she’ll need to register the DBA name “JS Designs” in each Nevada county where she plans to operate.

Step 2: Verify Name Availability

One of the requirements to register a business name in Nevada is that each business operating in a county has a unique name. To research, you will need to search the county name database in each county where the business will operate to make sure the name is available. Most counties offer an online name search database, but some will require a visit in person.

Step 3: File the Fictitious Firm Name Form

If you plan to operate under a unique business name, registration requirements apply. Navigate the process by getting a Fictitious Firm Name (FFN) form from each county where the business will operate. The forms must be notarized.

Registering a Nevada assumed name won’t guarantee that no other business will use the name. For stronger ownership of your name, consider applying for a federal trademark via the U.S. Patent & Trademark Office (USPTO).

Step 4: Obtain Required Licenses

In addition to setting up the business structure and naming, there are business licensing requirements to be aware of. The exact licenses needed will vary based on the business activity and location, and not on the choice of business structure. Some common requirements include:

  • State of Nevada business license: The State of Nevada requires a business license for every entity operating in the state.
  • Local business license: In addition to the state business license, you may need city or county licenses. The rules for business registration vary by location and business type. Check with local city officials or an economic development office for specific requirements.
  • Nevada Business Identification Number: If your business sells physical products, offers certain services, or hires employees, apply for a Business Identification Number through SilverFlume, Nevada’s business registration portal.
  • Occupational permits: Certain professions in Nevada are regulated and require permits. For example, contractors, child care providers, and cosmetologists need specific permits.
  • Employer Identification Number (EIN): While not always necessary for sole proprietorships, an EIN is required if you plan to hire employees. Some banks may also require an EIN to open a business account, or you can use your social security number.

Related: What business licenses are needed in Nevada?

Wrapping Up

Starting a sole proprietorship provides a low-cost, uncomplicated way to turn your business idea into reality in Nevada. With minimal paperwork and no formation fees, you can quickly establish your sole proprietorship by following the steps outlined.

We want to hear from you. Are you considering a sole proprietorship? What influenced your decision? If you have any questions about setting up your business in Nevada, please comment below. We’re here to help.

Author

  • Greg Bouhl

    With over two decades as an entrepreneur, educator, and business advisor, Greg Bouhl has worked with over 2,000 entrepreneurs to help them start and grow their businesses. Fed up with clients finding and acting on inaccurate and outdated information online, Greg launched StartUp101.com to be a trusted resource for people starting a business.

How To Start A Nevada Sole Proprietorship

How To Start A Nevada Sole Proprietorship

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