Becoming self-employed as a sole proprietor is as simple as performing business activities and collecting revenue. However, things get a bit more complicated when you grow big, hire employees or look to formally register your company.

Legal Structures

A sole proprietorship is treated as an extension of the individual. You don't have to file any formal paperwork to operate as a proprietor. You even file your business and income taxes together. Small-business owners often set up as a limited liability company or S-Corporation for legal and financial protection. To structure your business this way, you must file legal paperwork with your state and account for the business separately.

Other Self-Employment Steps

When you hire employees, you need a federal employer tax identification number. You must also recognize and obey human resource laws, including paying minimum wages. Self-employed people account for their revenue and expenses and pay self-employment taxes as well as income taxes from the business. You may need to get debt or equity financing to invest in buildings, equipment and inventory for your business. Attracting customers or clients and providing a valuable product or service are also vital steps to self-employment success.