Can You Have Multiple Businesses Under One Sole Proprietorship?

Most often, individuals deep into an already established business could come up with other business ideas that aren’t similar, thus creating the dilemma of multiple business management. However, although it depends on your geographical location, you can have multiple businesses under one sole proprietorship.


As an entrepreneur, you may have come up with multiple business ideas, but starting a new business can be daunting. You might wonder if having multiple businesses under one sole proprietorship is possible. 

In this blog post, we’ll explore the feasibility of running multiple businesses under one sole proprietorship and whether it is a practical option for you. Before we continue, let’s take a brief look at sole proprietorship.

What Is Sole Proprietorship?

A sole proprietorship is a private company owned by a single person who pays personal income tax on business profits. 

Since having a different business or trade name isn’t required, many sole proprietors work under their own names. According to Census Bureau data, sole proprietorships account for approximately 76.2% of all firms in the United States.

Because there are no rules from the government, the sole proprietorship kind of business is the most accessible to start or end. Because of this, sole proprietors, contractors, and consultants use these kinds of businesses the most. 

Most businesses start as sole proprietorships and either stay that way or grow and change into limited liability companies or corporations.

Although being a sole proprietor typically requires owning only one business, many entrepreneurs like the idea of multiple income streams and soon develop another business where the business activities under the same ownership are very different. 

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Advantages of a Sole Proprietorship

Easy to Establish

Because no official action is necessary to establish a sole proprietorship, entrepreneurs can save money and time that would otherwise be spent on paperwork.

Total Control

A sole proprietorship allows the owner to make all company decisions without consulting partners or shareholders. You are liable for all business debts, losses, and obligations as the owner, but you are also entitled to all business profits.

You have a degree of privacy and autonomy that you won’t get with other business models since you don’t have to register your business legally. 

Because you are not subject to the same transparency or reporting obligations that governments impose on LLCs or corporations, one of the benefits of a sole proprietorship is the freedom to run and conduct your business as you see fit.

Tax Payments

One of the advantages of being a sole proprietor is that paying taxes is much simpler and less complicated than in other business types.

First, unlike other business models, a sole proprietor does not need to obtain an employee identification number (EIN) from the Internal Revenue Service (IRS). You can use your Social Security number as you would for any other banking transaction that requires it.

Another significant advantage of a sole proprietorship is the ease with which taxes can be filed. Because it is taxed as a pass-through corporation, the income and losses of a sole proprietorship are reported on your personal tax return. So you don’t have to worry about paying taxes for your business separately; you can do it all on your own yearly 1040 form.

Simple Banking Process

One of the next significant advantages of a sole proprietorship is simplified banking. Sole proprietorships are the only business entities that do not require a business checking account to operate.

You can make and receive business payments from your personal bank accounts as a sole proprietorship. You don’t have to worry about opening a business checking account. All you need to get started with banking is your own checking account.

Disadvantages of a sole proprietorship

No Assets Protection

Because sole proprietors are exempt from state registration, they miss out on the benefits of incorporating their business. As a sole proprietor, you are responsible for your business’s financial and legal aspects.

Although this is one of the advantages of being a sole proprietor, it also has a potential disadvantage. Without the protections of incorporation, any business-related legal, financial, or tax issues will fall on your shoulders.

By forming an LLC, for example, you can protect your personal assets from creditors and your business from personal lawsuits. However, as a sole proprietor, you are on your own and do not have the same legal protections as other business owners.

Personal assets like your home are just as vulnerable to lawsuit claims as commercial assets. 

Difficulties in Raising Capital

While the start-up costs of a sole proprietorship are cheap, issues in raising money might limit growth and put you in the red for a while. 

Because you are personally liable for business debts, you are also responsible for paying suppliers, administrative and labor expenditures, and so on. 

In addition, lenders are less likely to make loans to sole proprietorships than to LLCs or corporations. 

You can borrow money but must submit collateral to the financial institution. If you default on your loan, your business and personal assets can be seized.

Business Dies With Owner

Suppose the owner dies or a new buyer wishes to take over the company. In that case, the sole proprietorship must be dissolved and a new one formed for the firm to continue. This is because a sole proprietorship, unlike an LLC, corporation, or partnership, cannot be transferred. 

Courts make no distinction between a sole proprietorship and its owner. So, when the owner dies, the business ceases to exist unless the owner establishes an effective succession plan that allows the company to continue.

Are Multiple Businesses Under One Sole Proprietorship Possible?

The simple answer is yes. You can have multiple businesses under the same name as a sole proprietor. From the taxpayer’s perspective, suppose you’re a small company owner who chooses to report business revenue on your federal 1040 form. 

In that instance, you will record the revenue on Schedule C. In that document;

  • Part one assists you in calculating your company’s gross profit and income.
  • Part two is where you mention company-related costs such as advertising, transportation expenses, business insurance, and so on.

If you have two businesses, you must file dual Schedule Cs, one for each. However, you can submit all the forms and computations with your personal income tax return under your TIN, which identifies your sole proprietorship.

Assume you operate a yoga studio and also sell wigs on the side. You’d fill out two Schedule Cs, entering amounts per line item for each dollar spent only on that firm. 

In a nutshell, you can have many enterprises under one sole proprietorship using DBAs. However, the business operations must be extremely separate from one another.

What Are DBAs?

DBA stands for “doing business as.” A DBA enables you to give your business or a portion of your business a name other than the one registered with the state. 

Filing for a DBA allows you to do business under a different name than yours; your DBA is distinct from both your name as the business proprietor and the legal, registered name of your business.

Consequently, if Paul Clark wants to start a door repair business, he will do so under his own name unless he registers his DBA as “Paul’s Door Repair Shop.” 

Depending on the state in which you conduct business, you must adhere to your state’s DBA requirements. 

Registering a DBA is simple and inexpensive. Despite its numerous benefits, it is essential to note that it is not a formal business structure and does not offer liability protection. 

Getting a DBA gives your name legal standing but does not protect you or your assets from legal action.

Benefits of DBA in Sole Proprietorship

Operate Your Business Using a Chosen Name

Sole proprietorships and general partnerships must do business under their own names. 

So, if your name is Paul Clark and you run a Door repair business as a sole proprietor, you won’t be able to use the name Paul Clark Door Repair. 

You’ll have to do business with Paul Clark. Filing a DBA resolves this issue. 

You won’t have to worry about this if your company is formed as a DBA since you’ll be free to pick your desired business name when you incorporate it.

Business Branding

A DBA can help you if you now or want to operate many businesses under a single umbrella corporation. Assume you run a restaurant and want to start a phone repair business. 

Because the two are unlikely to be able to operate under the same name, you’ll need to obtain a DBA to possess two independent registered businesses with different names.

Easy Banking

Most banks require an Employer Identification Number (EIN) when opening a business checking account. You can obtain an EIN quickly if you register your business with the state or create a DBA.

In addition, specific clients, partners, and financiers demand that sole proprietorships and general partnerships have filed DBAs before doing business with them.

DBA Alternative

Although a DBA gives a professional outlook to your business while allowing you to operate as the sole proprietor, it doesn’t provide legal protection against your asset. 

This means that if you get involved in a legal case on one of your businesses, all assets from every other business you own are at risk. This is where incorporating a single-member LLC comes in.

What is LLC?

A limited liability corporation, or LLC, is a legal organization used to own, run, and protect a business in the United States.

An LLC, or limited liability company, offers business owners the protections generally reserved for corporations and the simplicity usually reserved for sole proprietorships. 

LLCs provide legal protection for personal assets and pass-through taxes through a distinct business not restricted to certain shareholders or subject to onerous regulations.

Single-Member LLC

A single-member LLC is a legal entity that offers limited liability protection and pass-through taxation. It must be registered in the state where it was formed, usually where the company does business.

The phrase “single-member” denotes that there is only one owner of the LLC, as opposed to an LLC with multiple owners. All the benefits and drawbacks of a multi-member limited liability company apply to a single-member LLC.

Other Benefits Include

From the viewpoint of the law, an LLC is a legal entity independent of the owner. 

This implies that your LLC is held accountable for its conduct when entering into agreements or contracts, incurring debts, or taking on other commercial duties.


LLCs usually do not pay taxes at the company organization level. 

Any business revenue or loss is passed through to the owners and reported on their personal income tax returns. Taxes are paid at the individual level.

Key Takeaways

Multiple businesses can exist under a single sole proprietorship. However, it is critical to consider the legal and financial implications of doing so. 

While it is an appealing option for streamlining administrative tasks and lowering costs, it is critical to carefully weigh the risks and benefits before deciding.

As with any business venture, consulting with legal and financial professionals is essential to ensure regulatory compliance and maximize success. 

Consider your pricing strategy!

Cost plus pricing often makes sense for sole proprietorship businesses. Check our breakdown of cost plus pricing to see if it’s the right approach for you.



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