The Solopreneur Guide

StartupOwl may earn a commission when you use links on this page to sign up for services. This does not affect our editorial ratings or recommendations. We only recommend tools we have researched and trust. Read our full disclosure policy for details.

Solo businesses are the biggest group of businesses in the country by count. In 2023 there were 30,427,808 of them, up from 29,811,495 in 2022, and together they brought in nearly $1.8 trillion. The table below gives each figure with its year and source, because these counts come from different surveys and are easy to mix up.

The two Census counts cover businesses. The Bureau of Labor Statistics figure counts people, and only those whose business is not incorporated, which is why it is much smaller. We link to our LLC formation guide, our business bank account comparison and our small business grants list where each step needs them.

A solopreneur owns and runs a business alone, with no employees on payroll. You can still hire freelancers or contractors for a project. The work, the decisions and the income all depend on you.

A freelancer sells hours or projects. A solopreneur usually tries to build something that pays without trading every hour, such as a product, a repeat service or a monthly package. Many people start as freelancers and move toward that. Our solopreneur vs entrepreneur guide covers the labels in more detail.

The Census count includes any business with no paid employees that files federal income tax and has at least $1,000 of receipts a year. That means a weekend side business counts the same as a full-time consultancy. You qualify if you are the only owner and have no W-2 staff. Common setups are a sole proprietorship, a single-member LLC, or an LLC or corporation taxed as an S corporation. See our sole proprietorship vs LLC comparison to choose.

Going solo is cheap to start and fast to change. It also moves every risk an employer used to carry onto you. The average is modest. Nearly $1.8 trillion spread over 30,427,808 businesses is under $60,000 of revenue each, before rent, software, insurance or tax. Many of those are side businesses, so a full-time solo business can earn well above that, but plan for a slow first year.

Burnout is the risk people underrate most, because the business stops when you stop. Our entrepreneur burnout guide covers how to pace the work. For ideas that suit one person, see our solopreneur business ideas page, and for tools that take admin off your plate, see our guide to AI tools for small business.

These five steps take you from an idea to a business that can take payments. The first one costs nothing and saves you from paying fees on an idea nobody buys.

Step 1. Find a paying customer before you register. Talk to at least 10 people who could buy. Ask what they use now and what it costs them. Then ask for a deposit or a pre-order. One real payment tells you more than any survey.

Step 2. Choose your structure and register. A single-member LLC keeps business debts apart from your personal assets and is taxed on your own return by default. State filing fees run $35 to $500, lowest in Montana and highest in Massachusetts. You can file yourself on your state's site, or pay a service. ZenBusiness starts at $0 plus the state fee and Northwest Registered Agent at $39 plus the state fee. Our how to start an LLC guide covers filing yourself, and our LLC formation services comparison covers the paid route.

Step 3. Get your EIN and open a business bank account. An Employer Identification Number (EIN) is free from the IRS and you apply online. Then open a business bank account and send every client payment there. Mixing personal and business money makes tax harder and can weaken your LLC's protection.

Step 4. Set up bookkeeping and plan for tax. Wave Starter costs $0 and covers invoices and expenses. QuickBooks Simple Start lists at $38 a month when you need more. You owe self-employment tax of 15.3% (12.4% Social Security, 2.9% Medicare) once net earnings reach $400, plus income tax. A common rule of thumb is to set aside 25% to 30% of each payment. Our quarterly tax payments guide explains the due dates, and our accounting software comparison covers other options.

Step 5. Put up a simple presence and get your first client. A Google Business Profile, a LinkedIn page that states your offer, or a one-page site is enough to start. Use our small business marketing plan template to plan outreach, and our local SEO guide if you serve one area.

The Small Business Administration (SBA) funds partner groups that advise small business owners for free or at low cost. None of them require you to have employees.

Start with SCORE if you want someone to test your idea, and an SBDC if you need help with numbers or a microloan application of up to $50,000. Our SBA microloan guide covers how to apply, and our women entrepreneur resources page lists more programs.

A new solo business needs four things set up well, and most of them cost little or nothing at the start. Prices below come from each provider's row in our reviews, so they update when the provider changes them.

LLC formation. ZenBusiness starts at $0 plus state fees on its Starter plan, and its Pro plan costs $199 a year. Northwest Registered Agent charges $39 plus state fees, and its registered agent service renews at $125 a year.

Business banking. Mercury has no monthly fee on its base plan ($0). Mercury is a financial technology company, not a bank, and its accounts are held at partner banks, see the disclosure below. Our business bank account comparison covers other options.

Bookkeeping. Wave Starter is $0 for invoices and expense tracking, and Wave Pro at $19 a month adds bank feeds. QuickBooks Simple Start lists at $38 a month and suits you once an accountant wants your books in QuickBooks.

Tax and legal advice. Pay a CPA for one hour before you choose an S corporation election, since it only saves money above a certain profit. Our self-employment tax guide explains how that tax is worked out. Use a business attorney for any contract with a large amount at stake.

The paperwork can wait until you have clients. Four things are worth having before you hand in notice, because they are hard to fix once your salary stops.

• 6 months of personal costs saved. Many clients pay invoices weeks after the work is done.
• At least one client who has already paid you. A promise to hire you later is not income.
• Health cover sorted. Price a plan on HealthCare.gov or a spouse's plan before your employer cover ends.
• Your current contract read. Check any clause on competing with your employer or approaching its clients.

If you are still testing the idea, our side hustle to business guide covers building it alongside a job. Our freelancer to LLC guide covers the switch once clients are steady, and our first-time founder mistakes guide lists the costly errors to avoid.