Legal Question in Business Law in Massachusetts

Re: Sole Proprietorship

The simplistic answer is that there is no formality to creating a sole proprietorship -- simply commencing business does it.

As you move from the point of inception, other posters have pointed out that there are certain milestones where formalities are required:

1. Doing business other than in your own personal name entails filing a "d/b/a" certificate in your town clerk's office. Before doing that, it is advisable to check the Mass. Secretary of State database to see whether anyone else is already using the same name. Registration at the state level is not required.

2. If you do nothing more than commence business yourself, you would file a Schedule C with your Form 1040 (federal) tax return. Nothing more is required. However, if you have employees or get into accrual accounting, consulting with a CPA is a very good idea.

3. By all means check out the options for forming an entity (corporation, LLC, etc.), but keep in mind that you remain liable for your personal actions even if you form such an entity. Thus, for example, if you were an electrician and form an LLC, and then perform work on a building that burns down because of your defective wiring, the owners are going to come after both you and your LLC -- you can't escape liability for your personal negligence just because you create an LLC. Thus, until you have employees or contractors performing work in your stead, the formation of an entity is an unnecessary expense.

Best wishes,

LDWG

Re: Sole Proprietorship

A sole proprietorship only requires a registration of the name of the business in each community in which it operates (and a License if required by law) and filing the appropriate registration forms with the MDOR such as sales tax and payroll tax and the IRS, assuming you are paying sales taxes or payroll taxes you would be best-off applying for a Employer identification number. However, you should check with your accountant if you have one to make sure what tax registrations would be required and the best way to handle it.

You can register as many names for as many businesses as you like as a sole proprietor but if you are ever sued not only are you personally liable but each and every business you operate will be subject to attachment as well.

Depending upon what you intend to do, there is probably a better way to do what you want and give yourself more protection than a simple proprietorship would.

Please feel free to follow-up if you have more questions.

Business Organization: Sole Proprietorship

Hi - I'll try to provide you with guidance as to the formation of your business.

Without turning this into a term paper, I'll highlight a few important areas for you to consider: 1) I hope you've at least considered the pros and cons of setting up a corporation (corp.) or a limited liability company (LLC), if you haven't you should consult with an attorney - these legal entities can provide tax advantages and can limit your liability in ways that a sole proprietiorship cannot, depending upon the nature of your business and other factors; 2) again, depending upon the nature of your business, give some thought to the proper identification of your business; if your name is John Jones and you'd like to operate a plumbing business, then calling your business "John Jones Plumbing" is fine - if you'd like to call the business "Super Plumber" or something like that (something other than your own name) then you'll have to reserve what's referred to as a trade name with the Secretary of State's office - that office will make sure that the name you've selected isn't already in use by another business; 3) be sure to obtain the proper insurance to protect yourself and your business, esp. if you're not going to benefit from the protection that a corp. or LLC provides; if you plan to operate a storefront or place of business which is open to the public then get liability ins in case of accident or injury on the premises (your ins agent can help with this); also obtain ins to protect you from lawsuits resulting from any negligent or deficient performance by you or your business (for lawyers and doctors we call it "malpractice ins," it's also known as "Errors and Omissions ins"); 4) be scrupulous about the financial side of your business and maintain perfect separation between personal and business accounts, expenses, etc; establish an account for your business, keep all of your receipts for business expenses and expenditures, and find a good CPA, accountant or bookkeeper to manage your books and to help you prepare your return at tax time; 5) if your business will have employees, then I would strongly encourage you to consult with an attorney so that your business is in full compliance with state and federal laws regarding unemployment ins, emp withholdings, workers comp, etc. There is more to consider, but this should at least give you some ideas as to how and where to begin.

I know of no law which would restrict you from operating more than one sole proprietorship.

My name is Len Foy and I'm an attorney with Gould & Gould, with offices in Methuen MA and Londonderry NH. Our firm represents and advises small businesses, if you'd like a free initial consultation then call 603-434-3437 to schedule an app't.

If you'd like to send me a private email concerning the above my email address is [email protected].

I wish you success with your new business.

Regards - Len

Re: Sole Proprietorship

You must file the appropriate form with the MA Secretary of State's office and pay a fee. You may have more than one corporation.