If you are considering starting a business, the simplest and least expensive form of business is a sole proprietorship. A sole proprietorship is an unincorporated one-person business that reports its income and expenses directly on the individual’s personal tax return (Form 1040) using Schedule C, Profit or Loss From Business, or Schedule C-EZ, Net Profit From Business. Schedule C-EZ is for self employed individuals with less complex situations. A sole proprietorship has no separate legal existence apart from the owner and because of that the business itself is not taxed separately. The owner is entitled to all profits and is personally liable for all debts and obligations of the business.
If you choose to operate under a name different than your own, you will most likely have to file a fictitious name (also known as an assumed name, trade name, or DBA, short for “Doing business as”).
Filing a Trade Name in Arizona
In Arizona, trade names can be filed in the Office of the Secretary of State.The registration of a trade name is not legally required in Arizona but it is an acceptable business practice. Trade name registrations are active for five years and it is recommended to renew the registration beginning six months before its expiration date. If the registration has expired and no one else has registered the trade name you may re-register the trade name and pay a renewal fee of $10. Owners of a trade name may cancel the registration at any time without paying a fee.
See Arizona Trade Name and Trademark Handbook for details.
See Forms and Resources for more information.
A variety of useful information is available on the IRS website, including:
- Self-Employed Tax Center
- Sole Proprietor
- SB/SE Tax Center
- Employment Taxes
- What are FTDs and Why are they Important?
- Small Business Taxes – The Virtual Workshop (video)
- Starting & Managing a Business – U.S. Small Business Administration