If you’re one person who conducts business for profit, and you assume all liabilities and debts of the business, then you meet the definition of a sole proprietorship.
Some sole proprietors, however, are required to register with the Indiana Department of Revenue (DOR). You will need to register your sole proprietorship if:
- You will be selling products or tangible items (sales tax)
- You have employees (withholding tax)
- You sell food and beverages (sales tax and food-and-beverage tax)
- You rent accommodations for less than 30 days (innkeeper's tax)
- You rent motor vehicles (motor vehicle rental tax)
- You distribute gasoline or special fuel (prepaid fuel tax)
- You sell tires (tire fee)
- You sell fireworks (safety fee)
To register a sole proprietorship with DOR, you must submit a Business Tax Application (Form BT-1). The form allows DOR to set up the appropriate tax accounts for you.
Example 1: Geoffrey decides to open a booth at an antique mall. His booth sells restored antique furniture. He hired his niece, Molly, to help him run the booth. Geoffrey’s business sells tangible items (furniture), and he has an employee. He must register for sales and withholding taxes and receive a Retail Merchant Certificate. To register for these taxes, Geoffrey will need to fill out the Business Tax Application (Form BT-1) and file it with DOR.
Example 2: Harriett is a seamstress. She repairs and alters clothing and drapes for her friends and family. Harriett is not selling any tangible property, so she is not required to file a Business Tax Application (Form BT-1). While Harriett will not register her business with DOR, she will report the income from her services on her individual income tax return.
Example 3: Juanita opens a computer store. She sells computer components and offers repair services for electronics. The store sells products so Juanita needs to register for sales tax with DOR and receive a Retail Merchant Certificate. She can register by filing a Business Tax Application (Form BT-1).
These examples show some of the many possibilities for sole proprietorships. They are not meant to provide advice for organizing your business.
For additional help registering your sole proprietorship, you may e-mail DOR or call us at 317-233-4015.
- Indiana Secretary of State
- INTax - File and Pay Various Business Tax Types and Much More
- Indiana Current Year Tax Forms
- Indiana Small Business Development Center
- Information on Sole Proprietorships from the Internal Revenue Service
- IRS Small Business and Self-Employed Tax Center
- Frequently Asked Questions