What is a sole proprietorship?
A sole proprietorship is a business structure where a single individual owns and runs the business. It is the most common type of business. Some examples of sole proprietorships include: freelancer, consultant, accountant, personal trainer, photographer, tutor, etc.
Sole proprietorships can look different ways:
They could work alone at home and run their business online
They could operate alone, seeing clients in an office space
They could run a storefront business with employees
As a sole proprietor, you and your business are legally the same. The business is not a separate entity from you. All the business profits and debts go to you as the owner. If someone sues the company, your personal assets are potentially at risk (which is known as unlimited liability).
According to the Small Business Administration, a sole proprietorship can be a good way to test a business idea before scaling it up to a more formal business structure like a partnership or limited liability company (LLC).
Establishing a sole proprietorship in Massachusetts
File with the Secretary of the Commonwealth
A basic sole proprietorship run by one person in their own name with no employees can start operating immediately in Massachusetts. You do not register the business with the Secretary of the Commonwealth.
Decide if you need a business certificate (DBA)
If you want to run your business under a different name than your own, you need to file a business certificate (also called a DBA or "doing business as").
For example, John Smith doesn’t need to file a business certificate to operate “John Smith Designs.” He will have to file a business certificate if he wants to operate under the DBA name “Creative Design Services.”
You'll file your business certificate in the city or town where your business is located.
Learn more about if your business needs a business certificate and how to get one.
Also, if you want your business name to be something other than your name, you should first check with your city or town to be sure that name is not already in use. (Many cities and towns let you look up registered businesses. For example, the city of Boston offers a "Doing Business As" search.)
Get an EIN (Employer Identification Number) from the IRS
The Internal Revenue Service (IRS) issues Employer Identification Numbers (EIN) to identify a business. If you answer yes to any of these questions, you must get an EIN. It's also called a Federal Tax Identification Number (FEIN). If you answer no to the questions, you will use your Social Security Number to identify your sole proprietorship.
Register with MassTaxConnect
You will need to register your sole proprietorship with MassTaxConnect if your business will offer taxable goods, rentals, or services or if you will have employees. If you'll be paying quarterly estimated taxes, you can do so through MassTaxConnect as well. You will need an EIN or a Social Security Number to register.
Get licenses or permits
If your business is a trade or other licensed profession (massage therapist, electrician, architect, etc.), you must check with the state regulating board for your profession to find out what permits or licenses you need to operate legally in Massachusetts. You'll find many state boards listed with the Division of Occupational Licensure. You can visit the Department of Public Health to find boards regulating healthcare licenses. You can also check with your city or town to learn about required permits.
Taxes and sole proprietorships
As a sole proprietor, you will pay personal income tax on all your business profits. You will file your business expenses and income on Schedule C of your Form 1 (Personal Income Tax Return) by April 15, or the next business day if the 15th falls on a weekend or holiday.
Find more information about when and what to file for your personal income tax.
Additional taxes
You might be responsible for additional taxes, depending on the type of business you have or if you have employees. Find guidance from the Department of Revenue for new businesses.
Additional operating requirements
Check if you need workers' compensation insurance
All Massachusetts employers must carry workers’ compensation insurance. This is required no matter how many employees you hire. This also applies to you if you’re going to be an employee of your business.
| Date published: | June 20, 2024 |
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| Last updated: | March 27, 2025 |