In Alabama, it is straightforward establish a sole proprietorship as there is no need to file any legal documents with the Alabama Secretary of State. In fact, there are simply four easy steps you need to take.
The first is to choose a name for your business. As a sole trader you can use your own name or you can choose another one. You should try and ensure it is not too similar to any other name which has been registered due to trademark protection, but you can search on line to check for that.
Secondly you then have the option of filing your own name, but under Alabama law this is not essential, it will just give you more protection and stop someone else using it in the future.
Depending on what your business will actually do, you may need to obtain different licenses and permits. In Alabama all businesses must have what is called a privilege license which is renewable annually from October 1. You just have to go to the probate judge in the county where your business will be located to obtain it. Different types of occupation then require different permits or licenses and you should check with your local licensing department to see if you need any of them.
The next stage is to determine whether you will have employees and if you will you will need to obtain a number to use for the IRS for tax reporting. It is called an Employer Identification Number, or EIN and you can register online with the IRS to obtain your number. If you are not planning on having employees then you do not need one, although some banks require you to have one before you set up your business bank account.
