How Much Does It Cost to Register a Sole Proprietorship in the U.S.? A Detailed Breakdown of the Real Costs

How Much Does It Cost to Register a Sole Proprietorship in the U.S.? A Deep Dive into the Real Costs and Details

In recent years, as the global startup landscape continues to evolve, more and more entrepreneurs have turned their attention to overseas markets-especially the United States, a country with a massive consumer base and a well-established business environment. For many international entrepreneurs, setting up a sole proprietorship is often the first step toward entering the U.S. market. But how much does it really cost to register a sole proprietorship in the U.S.? And what are the key details and hidden truths behind the numbers? This article breaks it all down using the latest 2025 information.

1. What Is a U.S. Sole Proprietorship?

A sole proprietorship is the simplest and most common form of business structure in the United States. It is owned and operated by a single individual, with all profits going directly to the owner. However, the owner is also personally liable for all business debts and legal obligations. This structure is ideal for small businesses or freelancers, as it’s easy to set up and relatively inexpensive.

2. Registration Costs From Tens to Thousands of Dollars

The cost of registering a sole proprietorship varies by state and depends on several factors, including local regulations, whether you use professional services, and whether you want to trademark your business name. Based on the latest 2025 data, here’s a breakdown of the typical expenses

1. Business Name Registration DBA

If you want to operate under a name different from your personal name, you’ll need to register a Doing Business As DBA name. This usually costs between $10 and $100, depending on your state or county. For example, in California, DBA registration ranges from $25 to $75.

2. Business License Fees

Most states require entrepreneurs to obtain a business license before starting operations. Fees typically range from $20 to $400 annually. In Texas, a business license costs around $100 per year, while in New York City, it can be significantly higher.

3. Employer Identification Number EIN

While sole proprietors can use their Social Security Number SSN for tax purposes, many choose to apply for an Employer Identification Number EIN for privacy and business growth. The IRS offers EINs for free, so this step costs nothing.

4. Professional Service Fees

If you’re unfamiliar with the U.S. registration process, you might hire a lawyer or a business registration service. These fees typically range from $200 to $1,000, depending on the complexity and location. Some companies offer one-stop services, including name checks, document preparation, and filing.

5. Trademark Registration Optional

To protect your brand name or logo, you can register a trademark with the U.S. Patent and Trademark Office USPTO. Official fees are around $250-$350 per class, and if you hire a lawyer, total costs may range from $500 to $1,500.

In summary, the total cost of registering a sole proprietorship in the U.S. can range from $100 to $2,000, depending on your location, whether you use professional help, and whether you choose to trademark your brand.

3. Hidden Costs You Shouldn’t Ignore

Beyond the direct registration fees, there are several hidden costs to consider

1. Annual Reporting and Tax Filing

While sole proprietorships don’t need to file complex annual reports like corporations, owners must report business income on their personal tax returns. Some states require a simple annual report with a small fee, usually around $10-$50.

2. Insurance

If your business involves retail, services, or physical operations, having business insurance is highly recommended. A basic General Liability Insurance policy typically costs between $500 and $2,000 per year, depending on your industry and business size.

3. Rent and Operational Costs

If you plan to open a physical office or store in the U.S., you’ll also need to factor in rent, utilities, and employee salaries. These costs vary widely depending on the city and industry.

4. Recent Trends Low-Cost States Are Gaining Popularity

According to a 2025 Forbes report, an increasing number of international entrepreneurs are choosing states with low registration costs and favorable tax policies, such as Wyoming, South Dakota, and Delaware.

Wyoming, for example, does not impose corporate or personal income taxes, and its registration process is straightforward. It’s also open to foreign nationals registering an LLC, offering more flexibility for future business expansion.

5. How to Save on Registration Costs

If you're on a tight budget, here are a few practical tips to cut costs

Handle the registration yourself instead of paying high service fees.

Choose a low-cost state like Wyoming or South Dakota.

Delay trademark registration until your business stabilizes.

Use the IRS website to get your EIN for free.

Research local tax policies in advance to avoid unexpected expenses.

6. Conclusion

Starting a sole proprietorship in the U.S. is not as expensive or complicated as it might seem. With the right knowledge and planning, you can launch your business with a relatively low initial investment. Whether you're looking to expand internationally or explore new opportunities, the U.S. remains a strong contender for global entrepreneurs.

However, before making any decisions, do your homework. Research thoroughly, understand your options, and choose the path that best fits your goals and budget.