How to Start a Sole Proprietorship in NY: Certificate, EIN, and Taxes

To start a sole proprietorship in New York, you simply begin doing business — the state requires no formation filing. What you do need, if you operate under any name other than your own legal name, is a Business Certificate filed with the county clerk in every county where you conduct business. Most sole proprietors will also want a federal Employer Identification Number, and depending on what you sell and where you work, you may need sales tax registration, local permits, or an occupational license before your first transaction.

Pick Your Business Name

You can operate under your own legal name (for example, “Jane Smith, Consulting”) with no name filing at all. Choose anything else — a trade name, sometimes called a “doing business as” or DBA name — and New York General Business Law Section 130 requires you to file a Business Certificate in every county where you conduct business.¹

Before committing to a trade name, search the online records of the county clerk where you plan to operate to confirm no one has filed the same or a confusingly similar name.

File the Business Certificate

Sole proprietors use Form X-201. The certificate has to include the exact trade name you’ll use, the physical address where the business is conducted, and your full legal name and residential address. Because Section 130 requires the address “at which such business is conducted or transacted,” a P.O. box will not satisfy the filing.¹ If you work from home, your home address usually serves as the business address.

Your signature must be notarized before you submit the form.² A New York notary public may charge no more than $2.00 per acknowledgment.³ Banks, shipping stores, and law offices commonly offer notary services.

File the notarized original in person at the county clerk’s office or send it by mail. In person is faster: you can often walk out with a stamped certificate the same day, while mail can take several business days.

Filing Fees

Fees vary by county. In New York City, the base filing fee is $100 in the Bronx, Manhattan, and Queens, and $120 in Brooklyn and Staten Island.⁴ Certified copies run about $10 each.² Order at least one or two certified copies at the time of filing, because banks and vendors will generally ask for a certified copy before they’ll open an account or extend services to a trade-name business. Counties outside the city set their own fees.

What Happens If You Skip the Filing

Operating under a trade name without a filed certificate has real consequences. You cannot bring a lawsuit to enforce any contract made in that name until you file. If a client refuses to pay, you are blocked from suing to collect until you go back and complete the filing. Knowingly failing to file, or making a false statement on the certificate, is a misdemeanor.¹

Get an EIN

An Employer Identification Number is the nine-digit number the IRS assigns for tax reporting. A sole proprietor with no employees can legally use a Social Security number instead, but many people get an EIN anyway to keep their Social Security number off W-9s, invoices, and 1099s. An EIN becomes mandatory the moment you hire employees, and some business bank accounts and retirement plans (a solo 401(k) or Keogh) require one.

Applying is free. The IRS online EIN Assistant issues the number immediately; you can also file Form SS-4 by mail.

Register for Sales Tax If You’ll Sell Taxable Goods or Services

If your business will sell physical goods or taxable services in New York, you must register with the Department of Taxation and Finance and obtain a Certificate of Authority before making any sales.⁵ Registration has to be completed at least 20 days before you begin selling.⁶ Register online through New York Business Express at no cost.

Operating without a required Certificate of Authority triggers civil penalties: up to $500 for the first day, plus up to $200 for each additional day, capped at $10,000.⁷ Repeat or willful violations can bring criminal charges. Once registered, you collect sales tax from customers at the applicable rate and remit it on the schedule the Department assigns.

Check Zoning and Occupational Licenses

Local zoning rules often limit what you can do from a home. Common restrictions cover the share of the home used for business, employees or customers on site, signage, noise, and inventory storage. In New York City, a home occupation cannot exceed 25 percent or 500 square feet of the home’s floor area and generally cannot employ more than one outside person at the residence. Outside the city, rules vary by municipality — check with your local building or planning department. Condo, co-op, and planned development rules can add further restrictions.

Some fields require an occupational or professional license before you can legally operate, including construction, cosmetology, food service, and health care. Confirm what your field requires with the relevant state licensing board or local agency.

Understand Your Tax Obligations

You and your business are the same taxpayer. Business income and expenses go on Schedule C, attached to your Form 1040.

Self-Employment Tax

On top of income tax, you owe self-employment tax on your net business earnings, covering Social Security and Medicare. For 2026, the rate is 15.3 percent: 12.4 percent for Social Security on earnings up to $184,500, and 2.9 percent for Medicare with no earnings cap.⁸ You calculate it on Schedule SE and can deduct half of it when figuring adjusted gross income.⁹

Quarterly Estimated Payments

With no employer withholding, you generally have to make quarterly estimated payments to the IRS using Form 1040-ES. The 2026 federal due dates:

April 15, 2026
June 15, 2026
September 15, 2026
January 15, 2027

You can skip the January payment if you file your 2026 return by February 1, 2027, and pay the full balance then.¹⁰ Missing a deadline or underpaying can trigger a penalty even if you end up with a refund at filing.

State Estimated Payments

Federal Schedule C income flows into your New York personal income tax return (Form IT-201). If you expect to owe $300 or more in state, New York City, or Yonkers income tax after withholding and credits, you must make quarterly estimated payments using Form IT-2105, on the same April, June, September, and January schedule as the federal payments. If your business operates within the Metropolitan Commuter Transportation District (New York City and Rockland, Nassau, Suffolk, Orange, Putnam, Dutchess, and Westchester counties), estimated payments for the Metropolitan Commuter Transportation Mobility Tax also go on Form IT-2105.¹¹

What Changes When You Hire Employees

Hiring even one employee, full-time or part-time, triggers several obligations at once:

Workers’ compensation insurance. Nearly all New York employers must carry coverage. Going without it is a misdemeanor at five or fewer employees, punishable by a fine of $1,000 to $5,000, and a felony above five employees, with fines of $5,000 to $50,000. The Workers’ Compensation Board can also impose an administrative fine of up to $2,000 for every ten-day period without coverage.¹²¹³
Disability and paid family leave insurance. Virtually all New York employers must provide both.¹⁴
Unemployment insurance. Register with the New York Department of Labor and begin paying into the state system.
Federal EIN. If you don’t already have one, you need it now.

Know That Your Personal Assets Are Exposed

A sole proprietorship gives you no built-in liability shield. Your savings, home, and car are exposed to the debts and legal claims of your business.¹⁵ If a customer is injured or you cannot pay a vendor, creditors can pursue your personal finances.

General liability insurance covers bodily injury, property damage, and related legal defense costs from your business operations.¹⁶ If you provide professional services like consulting, bookkeeping, or design, professional liability insurance (errors and omissions coverage) protects against claims that your work caused a client financial harm. Neither is legally required for most sole proprietors, but either can keep a single incident from wiping out your personal savings. If the business grows and liability risk climbs, converting to an LLC or another structure that separates business debts from personal assets is worth considering.

1
New York State Senate. New York General Business Law 130 – Filing of Certificates by Persons Conducting Business Under Assumed Name or as Partners
2
NYCOURTS.GOV. Certification / Business / Corporations
3
New York Department of State. Notary Public – Frequently Asked Questions
4
NYC.gov. Business Registration
5
Department of Taxation and Finance. Register as a Sales Tax Vendor
6
Department of Taxation and Finance. How to Register for New York State Sales Tax
7
Department of Taxation and Finance. Sales and Use Tax Penalties
8
Social Security Administration. Contribution and Benefit Base
9
Internal Revenue Service. Topic No. 554, Self-Employment Tax
10
Internal Revenue Service. Form 1040-ES – Estimated Tax for Individuals
11
Department of Taxation and Finance. Instructions for Form IT-2105 – Estimated Income Tax Payment Voucher
12
Workers’ Compensation Board. Workers’ Compensation Insurance
13
New York State Senate. New York Workers’ Compensation Law 52 – Effect of Failure to Secure Compensation
14
Workers’ Compensation Board. Disability and Paid Family Leave Benefits Coverage Requirements
15
U.S. Small Business Administration. Choose a Business Structure
16
U.S. Small Business Administration. Get Business Insurance