Expert Q&A

I would recommend registering your business at least as an LLC. This way, your personal assets will be protected, and your business taxes will flow through your personal income tax return.

As a self-employed or small business owner, you can file your return without a business license. However, a business license lends a higher level of recognition to the business. You can file your return and the Schedule C will capture your income and expenses for the business, Some states require certain types of businesses (ex. beverage and liquor) to have a specific license to operate. Having a Federal EIN number moves the business transactions to the business and flows to your social security number as profit or loss on the 1040.

As a small business owner, you can operate your business as a “Sole Proprietor” without getting any business license. The IRS says on Schedule C “Profit and Loss Statement” that you don’t need a business name or a EIN number to operate your business. It would be beneficial to get a DBA name for your business from your city so that you can open your business account and make your business more respectable. Keeping accurate records of income and expenses can then be quickly filed on a 1040 & Schedule C! Juan Williams, Your Tax Advisor

unincorporated business owned solely by you, then you are operating that business under the sole proprietorship structure. We have addressed licensing and tax considerations for both situations- operating as an LLC or as a sole proprietorship- but if our response does not adequately address your question, you may need to submit a follow-up question that clarifies your business and out-of-state operations in detail.

With respect to business licensing, regardless of how a business is structured it is required to comply with state and local business licensing and permitting requirements based on its particular operations. You will need to check with the State of WA your county and city governments.