How to Start a Sole Proprietorship in New Hampshire

If you've started selling your homemade jewelry online or running personal training sessions out of your garage, you've likely formed a sole proprietorship already—and you're not alone. When an individual starts a business (sells goods or services) and they haven't filed any legal documents with their state officially registering the business, then they've automatically created a sole proprietorship.

A sole proprietorship is low maintenance. It doesn't typically require you to file any creation documents or submit renewal filings or fees, and you can usually report your income on your personal tax return. But sole proprietors are personally liable for the business's debts and obligations, so you might need to dip into your personal funds to satisfy any debts your business can't pay.

In New Hampshire, you can establish a sole proprietorship without filing any legal documents with the New Hampshire state government. Though no action is required to legally create a sole proprietorship, you should follow four simple steps to start your business:

1. Choose a business name.
2. File a trade name registration with the New Hampshire Secretary of State (SOS).
3. Apply for licenses, permits, and zoning clearance.
4. Obtain an employer identification number (EIN).

For more information, read our article on how to start a business in New Hampshire.

1. Choose a Business Name

In New Hampshire, a sole proprietor can use their own legal name or a trade name—also sometimes known as an "assumed business name" or "doing business as" (DBA)—to conduct business. If you plan to use an assumed name or trade name for your business, state law requires that the name be distinguishable from the name of any other company currently registered with the state. (N.H. Rev. Stat. § 349 (2023).)

It's also a good idea to choose a name that's not too similar to another registered business to avoid trademark infringement. Under trademark law, your trade name can't be used by someone else in a way that would cause confusion among consumers. So, if you use a name that's the same as or too similar to someone else's trademark and you both provide similar goods or services, then you could be infringing on their trademark. If you find a competitor company already exists with a similar name, then it's best to choose another name.

For example, suppose you want to operate a pop-up bicycle repair shop under the name Granite Pedals and Spokes. Down the road, another bicycle shop does business under the name Granite Wheels and Spokes. You probably wouldn't be able to use your name because it's too similar of a name to the other bicycle shop and it would confuse customers.

To make sure your business name is available, you should run a search in the following government databases:

• New Hampshire SOS's business name lookup, and
• United States Patent and Trademark Office's Trademark Electronic Search System.

For more information, read our FAQ on how to choose and register a business name.

2. File a Trade Name Registration With New Hampshire

If you use a business name that's different from your legal name, New Hampshire requires you to register your trade name. For instance, suppose Marty McFly wanted to open a guitar shop under the name That's Heavy Guitars. He would need to register his trade name because it's different from his legal name, Marty McFly.

To register your trade name, complete a Form TN-1, Trade Name Registration and submit it to the New Hampshire Secretary of State. The filing fee is $50.

3. Apply for Licenses, Permits, and Zoning Clearance

Depending on your business activities, you could need to apply for business or professional licenses. You find information about requirements for specific professions and occupations on the Licensed, Certified, and Registered Occupations Index on the New Hampshire Employment Security (NHES) website.

The NHES provides information specific to each occupation, including:

• relevant laws and rules
• regulatory agency and contact information
• certification requirements
• examination requirements
• continuing education
• various fees, and
• additional information sources.

You might also need to comply with local regulations, building permits, and zoning laws. Check with your city and county governments for more information.

4. Obtain an EIN

Sole proprietors who wish to have employees need to obtain an EIN. This is a nine-digit number issued by the IRS for tax reporting purposes. All businesses with employees are required to report wages to the IRS using their EIN. You can register for an EIN online with the IRS.

Sole proprietors without employees aren't required to have an EIN. Instead, you can use your Social Security number to report taxes. Nevertheless, you might want to obtain an EIN. Some banks require an EIN to open a bank account, and having an EIN can reduce the risk of identity theft.

In New Hampshire, businesses are required to report taxes and file various employee reports. You might need to use your EIN when registering your business to report taxes through the New Hampshire Department of Revenue Administration (DRA).

Next Steps for Sole Proprietors

You should consider taking the following additional steps once you've started your sole proprietorship:

• Open a business bank account for your sole proprietorship. Using your trade name and EIN, set up a bank account to keep your business and personal finances separate. You should keep your business income and expenses separate from your personal funds so you can easily distinguish your business's financial profile for tax purposes. For instance, you can more easily report business deductions on your tax return if you've created a separate account.
• Obtain general liability insurance. Because sole proprietors are personally liable for all debts and obligations of the business, a business liability insurance policy can offer financial protection against unforeseen events. You should also consider other types of insurance for your business, including property and auto insurance. For more information, read our article on the types of insurance your small business might need.
• Report and pay taxes. New Hampshire, unlike other states, doesn't have a sales tax or use tax. However, New Hampshire does require sole proprietors to pay both a business profits tax and a business enterprise tax. The DRA has FAQ pages for both business profits and business enterprise taxes. Additionally, if you have employees, you must report and pay employment taxes on a periodic basis. (For more information, see our section on business taxes and deductions.)

To find out how to form a sole proprietorship in any other state, see our 50-state guide to establishing a sole proprietorship.

Consulting a Small Business Attorney

You might not need to submit paperwork to start a sole proprietorship in New Hampshire. But your specific circumstances could require you to file forms at the state and local level and comply with various rules and regulations. As a business owner, it's important to understand what steps you need to take to legally start and operate your sole proprietorship.

If you have business experience and only need to meet a few requirements to establish your sole proprietorship, you can probably do the work yourself. But if you need specific guidance or run into a complicated issue when starting your business, you should talk to a small business lawyer. They can help you register your business name, file your taxes, and obtain licenses and permits.