Starting a sole proprietorship under $500 is possible, but keep in mind that there might be some initial costs involved. Here's a basic outline of the steps you can take:

Business Idea and Plan: First, define your business idea and create a basic business plan. This will help you understand your market and potential expenses.

Business Name: Choose a name for your business. Ensure it's unique and not already in use in your state. You may need to do a name search which can cost a small fee, typically under $50.

Business Structure: As a sole proprietorship, you don't need to formally register your business entity. Your business income and expenses will be reported on your personal tax return. This aspect is usually free.

Permits and Licenses: Check if your local government or industry requires specific permits or licenses. These can vary in cost, but some may be inexpensive or even free.

EIN (Employer Identification Number): You might need an EIN if you plan to hire employees or open a business bank account. You can obtain an EIN from the IRS for free.

Business Bank Account: It's a good practice to separate your personal and business finances. Look for a bank or credit union that offers low-cost or no-fee business accounts.

Business Cards and Marketing: Design and print your own business cards or create a basic website using free website builders or platforms. These costs can be minimal, sometimes even free.

Operating Expenses: Keep your initial expenses low. You may need to buy basic equipment or supplies, but try to minimize unnecessary costs.

Taxes: Be prepared for income and self-employment taxes, which you'll need to pay on your business income. Set aside a portion of your earnings for this.

Insurance: Consider liability insurance, especially if your business involves potential risks. Insurance costs can vary widely, so shop around for affordable options.

Remember, the exact costs can vary depending on your location and business type, but with careful budgeting and by doing much of the work yourself, you can start a sole proprietorship for under $500. Be sure to research and understand the regulations and requirements in your area to ensure compliance.