Sole proprietorship in the United States
Thread poster: Marie Winnick

Marie Winnick
United States
Local time: 10:39
Spanish to English
+ ...
Jul 7, 2012

Hello, everyone. I am about to register myself as a sole proprietor in the state of Illinois (Cook County).

What I would like to know is how many translators who operate as sole proprietors have registered their DBA using simply their own name. I would like to have a business name separate from my personal name, though at the moment, all of my ideas are just too good to be original. I will make a separate post about that.

I do not want to wait to start doing business, so my thought is that if I were to build recognition based solely on my personal name for the time being, it would not be difficult to associate my personal name with a formal business name that I may choose in the future, whether or not I decide to incorporate.

I thank everyone in advance for your help.


 

Shiya Luo  Identity Verified
Local time: 08:39
English to Chinese
+ ...
If you are going to register for something, go for LLC Jul 7, 2012

Sole proprietorship = unlimited liability
No registration is needed for sole proprietorship. As soon as you start doing business as a freelancer, you are a sole proprietor.

As a translator, it's a pretty common practice in the US to be a sole proprietor. You need to buy your own insurance and pay your own taxes(Federal, Social Security, State, all that good stuff).
The real downside compared to a corp is that if you are ever being sued for damages caused by bad translation, or some other whatever reason, you assume all the liabilities for the damages the court rules.
If you want to protect yourself from lawsuits, register for a LLC. This way if you ever get in trouble, all you can lose is the business, not your house, the money in your personal bank, etc.

I'm not sure about what the exact tax benefits are for these two entities, but the difference shouldn't be big enough to be a deal breaker right now.

This is by no means legal/tax advice. I'm just speaking from my own experience.
Hope it helps.


 

Edward Potter  Identity Verified
Spain
Local time: 17:39
Member (2003)
Spanish to English
+ ...
Sole proprietorship Jul 7, 2012

Hello Marie.

I was registered as a sole proprietor for a different business a while back.

It is true that you have unlimited liability in this case, but you can buy errors and omissions insurance, for example from Hayes Infinity. On the other hand there are benefits from choosing the sole proprietor option.

You should be able to choose a DBA name when you register as a sole proprietor. So you should be able to use either name (yours or your DBA name), whenever you see fit.

Good luck.


 

Marie Winnick
United States
Local time: 10:39
Spanish to English
+ ...
TOPIC STARTER
LLC Jul 8, 2012

Thank you, Shiya. I actually plan to incorporate as an LLC in the next year or so. I think it is a better option than S-corp or C-corp. The main obstacle right now is my budget. It actually costs 600 dollars to register an LLC in Illinois. Pretty nuts, eh? Though my accountant thinks a sole proprietorship is a good fit for a new freelance translator as far as tax benefits go. Thanks again!

 

Marie Winnick
United States
Local time: 10:39
Spanish to English
+ ...
TOPIC STARTER
DBA and copyrights Jul 8, 2012

Thank you, Edward. That is what I was concerned about.

That now brings me to the question of trademark issues. Though it's no longer an immediate concern, as I plan to make my DBA akin to my real name, the web-based nature of this business makes the issue of copyrights unclear. So far, all of my business name ideas have proven too good to be original.

Before the Internet, I would have thought nothing of calling my company "Pangea Language Services," if there was another one of the same name in another state that was not registered with the US Department of Commerce. I had also thought of MLW Language Services, though there is an MW Language Services in Iowa, which I think could confuse consumers regardless of its geographical location. And what about overseas companies? If someone started a translation company in Spain or Chile with an identical name and mission as mine, I would feel infringed upon. How are such things figured out this day and age?

Thanks in advance.


 

LEXpert  Identity Verified
United States
Local time: 10:39
Member (2008)
Croatian to English
+ ...
Other considerations Jul 8, 2012

I have an Illinois S-Corp, after starting with a sole proprietorship. There are relatively few client-facing issues in transitioning from one to the other, especially if you continue to use the same name. However, you will need a new EIN for the new entity, and will have to send any clients who have your old W9 on file the updated one.

[Edited at 2012-07-08 11:13 GMT]


 

Marie Winnick
United States
Local time: 10:39
Spanish to English
+ ...
TOPIC STARTER
Re: Other considerations Jul 9, 2012

Thank you, Rudolf. That is helpful information. Cheers!

 


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Sole proprietorship in the United States

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