Guide to Registering a Business
1. Name Your Business
The first step toward registering a business is choosing a name. Naming your business is one of the most important steps in starting and branding your business. Your business name should represent your business’s personality and appeal to your target market. Explore potential business names with our free business name generator.
Consider using a "doing business as" (DBA) name for your business. A DBA can be used to brand or rebrand a business as well as to replace an already existing business name.
Once you’ve decided on the right business name, you will need to register your business name in the state you will be conducting business.
2. Choose a Business Structure
The most common business structures are sole proprietorship, partnership, limited liability company (LLC), and corporation. Each structure offers varying levels of personal liability protection, tax benefits, and maintenance difficulties.
A sole proprietorship is an informal business structure that is owned by one individual. Taxes for the business are filed under their name rather than the business’s, and the owner also retains personal liability for any actions taken against the business.
A partnership is an informal business structure that is owned by a group of individuals. The business owners are therefore personally liable for any actions taken against the business and must file taxes under their own names rather than the business’s name.
An LLC is a formal legal business structure owned by members. An LLC is the simplest business structure to form and maintain, providing personal liability protection as well as unique tax benefits.
A corporation is a formal legal business structure that is owned by shareholders and offers personal liability protection as well as unique tax benefits and investor opportunities but is more complex to maintain than an LLC.
Recommended: Read our full guide on choosing a business structure. Additionally, once you’ve chosen a business structure, we recommend appointing a registered agent to help you stay compliant with the law.
3. Determine if You Need to Register Your Business
In some cases, businesses are only required to register their business name and therefore don’t need to register their business. Sole proprietorships, for example, aren’t required to register with the state to conduct business. To find out the registration requirements for your business, we recommend a visit to the Small Business Administration (SBA) website.
Business structures such as LLCs and corporations require registration but offer many benefits to business owners, including personal asset protection and tax benefits.
Forming an LLC is simple and easy to maintain. LLCs provide you with personal liability protection to keep your personal assets safe should your business suffer a loss. Consider using an LLC formation service to make forming your LLC even simpler.
4. Register for Taxes
Next, you’ll need to register your new business for both state and federal taxes.
If your business has or will have employees, you need to obtain a federal Employer Identification Number (EIN). Registering for an EIN is easy and free through the Internal Revenue Service (IRS) website. Though an EIN isn’t required for all businesses, obtaining an EIN for your business offers many benefits worth taking advantage of, such as maintaining your corporate veil, building business credit, and opening a business bank account.
You will also need to register for state taxes such as corporate income tax and sales tax. Not every state implements these taxes. Do your research to ensure your business is registered for all applicable taxes. To learn more, read our small business sales tax guide to access our sales tax calculator and find the sales tax guide for your state.
5. Obtain Permits and Licenses
Finally, you will need to obtain the permits and licenses required to do business federally and in your state. State licensing and permit requirements will vary depending on your location (state, county, and city/town) as well as your industry. Federal licensing requirements depend largely on the type of business you are conducting, such as commercial fishing or aviation.
Most businesses require some sort of state licensing in order to operate legally. Failing to obtain the proper permits and licenses can result in hefty fines or even the closure of your business.
Find out which business licenses you need for your startup with our business license search.
Business licensing services can help you identify and fulfill all licensing requirements for your business and avoid penalties. We recommend using this helpful guide to compare the top five business license services to find the best one for your business’s needs.
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