Becoming a Sole Proprietor

Starting a sole proprietorship in Kentucky is a relatively straightforward process. Here are the basic steps:

1. Choose a business name:

 

If you operate a sole proprietorship under the real name of the individual owner, no registration of the business name is required. As defined in Kentucky Revised Statute 365.015 (1)," the real name of an individual shall include his or her surname at birth, or his or her name as changed by a court of competent jurisdiction, or the surname of a married woman."

If a sole proprietorship is operated under any name that doesn’t include the owner's real name, a Certificate of Assumed Name must be filed with the county clerk in the county where the individual maintains their principal place of business. For example, if an individual in Franklin County whose real name is Jane Doe wants to operate a sole proprietorship under the name "Jane’s Deli", she would need to file a Certificate of Assumed Name with the Franklin County Clerk’s Office because she will be operating a business under a name that is different than her "real name." Contact the county clerk’s office for additional information on registering an assumed name for a sole proprietorship. Sole proprietors do not file any paperwork with the Secretary of State.

2.Obtain any necessary licenses and permits:

 

Depending on the nature of your business, you may need to obtain various licenses and permits at the local, state, or federal level. Check with the Kentucky Business One Stop to see what licenses and permits you need.

3. Obtain a Tax ID Number:

 

If you plan to hire employees or file taxes as a business, you will need to obtain a Tax ID number (also known as an EIN) from the IRS. 

5. Open a business bank account:

 

Open a separate bank account for your business to keep your personal and business finances separate.

6. Keep records:

 

Keep detailed records of your business income and expenses to make tax time easier.

7. Get business insurance:

 

Consider getting business insurance to protect your business in case of accidents or other unexpected events.