Do I Have To Register My Sole Proprietorship With The State Of Michigan

If you lot established your business as a sole proprietorship, you probably did and then in role because it was easy, fast, and relatively inexpensive. Over time, many concern owners decide that it makes sense to expand their reach so they tin can serve customers located in boosted states. As is the case with entrepreneurs organized as corporate entities, limited liability companies, and partnerships, sole proprietors can conduct concern in multiple states. Each state'due south business organisation laws determine whether sole proprietors must register with the state's Secretary of State or other concern dominance. Every bit the business owner, the onus is on you to ensure you run across all applicable state registration and licensing requirements and that you empathize your tax obligations.

Registration and Licensing Requirements

Before conducting business organisation in a new state, discover out what that state'southward business registration requirements entail. Many, just not all, states crave sole proprietors to register their business organisation entities. Registration provides the states with, at a minimum, the possessor'south name and contact data. You may besides need to comply with land-, county-, or municipal licensing requirements in each geographic area where you intend to operate.

If your business uses a DBA ("doing business as") or fictitious name, you volition likely also need to take additional action to register the DBA proper name with the state or specific counties where you will conduct business. DBA registration, publication, and other notification requirements may employ even if the state does non register sole proprietorships.

Potential Registration Exemptions

Fifty-fifty if a land does require registration of sole proprietorships, cheque before registering to determine whether your business organisation actually needs to take that step. State laws vary; in today'south increasingly spider web-based economy, simply offering goods and services online to customers in other states does non necessarily trigger registration requirements in those additional states.

In general, if your concern has a concrete presence in the land, if y'all frequently and regularly acquit confront-to-face meetings in the country, if you have employees in the state, or if you lot accept one or more than concern licenses in the country, yous may need to register your sole proprietorship before conducting business in the land.

Taxation Considerations

Dissimilar corporations which pay taxes on business organisation earnings at the corporate level, sole proprietorships are "pass-through" or "disregarded" entities for revenue enhancement purposes. This means that the sole proprietor is responsible for reporting income and expenses every bit an private taxpayer. Expanding your business into some other land or multiple states does not alter the way your income is taxed.

However, if you are earning business concern income in additional states, you may demand to file and pay state or local income taxes in the new states for the money the business earns in the new states. This means it is critical to keep good records documenting how much income is attributable to each country.

Some businesses also need to obtain sales and apply tax permits earlier conducting business in new jurisdictions.

Not every state has a land income tax, and sales and utilise permits are not universally required. Talk to a tax professional to learn how operating your sole proprietorship in boosted states may impact your tax obligations.

If you want to create a new sole proprietorship or annals an existing sole proprietorship in additional states, you can piece of work with an attorney licensed in the new state(due south) or a reputable online legal services provider who can help y'all understand your requirements and the process.

This portion of the site is for advisory purposes merely. The content is not legal advice. The statements and opinions are the expression of writer, not LegalZoom, and have not been evaluated past LegalZoom for accuracy, completeness, or changes in the law.

Source: https://info.legalzoom.com/article/can-sole-proprietor-have-business-multiple-states

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