West Virginia Sole Proprietorship

How to Become a West Virginia Sole Proprietor

In West Virginia, becoming a sole proprietor is simple. There’s no official setup process or fees involved. To start a sole proprietorship in West Virginia, just start working.

Although it’s easy to begin, consider some extra steps. While not mandatory, many sole proprietors find them helpful.

DBA Acquisition

A West Virginia doing business as (DBA) name is a crucial part of many sole proprietorships, as it enables you to use an assumed name for your business, rather than your own personal name. The advantages of acquiring a DBA start with image ― most customers feel that an assumed name is more professional and trustworthy than doing business with a company that uses its owner’s personal name instead.

That said, sole proprietors can sign up for a business bank account using their DBA name, which is another step that goes a long way toward making customers feel more comfortable doing business with you.

In West Virginia, DBAs are sometimes referred to as “trade names”. Before registering a trade name with the West Virginia Secretary of State, you’ll need to check its availability using the State’s Business Organization Search database. Afterwards, call the Secretary of State Business Division at (304) 558-8000 to ask for an informal name check.

When you confirm that your desired DBA is available, you may claim it by registering online with West Virginia’s One Stop Business Portal.

Determine Taxation Requirements

Sole proprietors without employees usually don’t need to acquire a federal tax ID number (EIN), because as a one-person business, you can typically just use your own social security number for most things an EIN is used for. Still, if you would rather not use your SSN for privacy purposes, it would be a good idea to get an EIN regardless.

Beyond that, the nature of your business will determine which taxes apply to you as a sole proprietor.

For example, if you sell soft drinks, tobacco, fuel, or any type of alcohol, you’ll be subject to paying the corresponding tax. These taxes (known as excise taxes) and others are all detailed on the Excise Tax Page of the West Virginia State Tax Department website. Another common tax is Sales and Use tax.

You will discover your state-level tax liability when you obtain your West Virginia business registration certificate from the State Tax Department. This can be done either online or using the WV/BUS-APP form.

Obtain Business Licenses and Permits

There isn’t a requirement in West Virginia for sole proprietors to acquire a general business license, but depending on the nature of your business you may need other West Virginia licenses and permits to operate in a compliant fashion.

West Virginia has both regulatory and occupational licenses that may apply to your West Virginia sole proprietorship. Thankfully, the state makes license registration quite easy through the WV One Stop Business Portal. More information on licensing in general can be found in the Apply for Licenses and Permits document provided by the West Virginia Business Division.

In addition, you should check to see if your business needs any licenses or permits on the local level.

Often, West Virginia cities and counties will have their own license and permit specifications. For example, Huntington, Morgantown, and Charleston all have their own local business license requirements.

What Is a West Virginia Sole Proprietor?

As opposed to a corporation or West Virginia limited liability company (LLC), the sole proprietorship is not a legal business entity. The sole proprietorship is a one-person business that is not considered to be a distinct entity from the person who owns it, and it is frequently operated using the owner’s personal name.

Here are the three main things you need to know:

Tax Responsibilities

Because there’s no distinction between the owner and the business itself, sole proprietors don’t need to file business tax returns ― they instead simply claim any business profits or losses on their personal tax returns.

Contracts

Sole proprietors are allowed to sign contracts using their personal name, and along those same lines, customers can write checks to the business by using the sole proprietor’s name.

More Flexible

The other big difference between sole proprietorships and more formal business structures is the fact that sole proprietors are allowed to commingle business and personal assets as much as they want to. With LLCs and corporations, ownership is required to keep their assets separate from those of the company. The downside of this aspect for sole proprietors is that if your business is sued, creditors are free to pursue your personal assets like your house, car, personal bank accounts, etc. For corporations and LLCs, creditors are limited to your business assets.