Laws and Ethics

You Have a Sole Proprietorship and Might Not Know It

Scenario: you don’t have your own legit business today. You have a couple of people you’ve done some work for once or twice this year and you’ve been paid a little bit of money. You don’t want to start a sole proprietorship because you read that you should start an LLC or SCorp, so you’re planning to set that up when you have a little more time.

Sound familiar?

Well, let me be the first to say…Congratulations—you’re a business owner!

A Sole Proprietorship: You Might Already Own a Business and Not Even Know It graphic

If you have “a couple of people you’ve done some work for” and “you’ve been paid a little bit of money” you have clients and income. You already have a business—even though you don’t have an LLC or SCorp or any other legal business structure.

In a nutshell, if you provide a service or if you sell something, and collect money from it**, you have a sole proprietorship—unless you’ve formed a legal structure for that business (if you don’t know what I mean by “formed a legal structure”, then you probably haven’t done it).

**This is all assuming that what you do or sell is legal. Side Hustle Business School encourages legal side hustles.

As an example, when you design a logo for a client, and they pay you, you’re operating as a sole proprietor. That’s generally all it really takes to have a sole proprietorship.

Before you get all nervous, you haven’t done anything wrong. Many businesses start this way. You probably don’t need to go run out and start filing any papers or doing anything much different than what you have been doing.

You should, however, be aware that you already are running a business. Which means if you were “waiting to start your business one day”, but you’re already getting paid, you’re actually not waiting to start your business.

You’ve already started your business and just didn’t know it. Continue reading →

Posted by Naya the Creative in Laws and Ethics, Side Hustle Logistics, 0 comments