Registering for things is one of those annoying but unavoidable parts of life, whether you’re registering for school, a fishing license, or a business permit. For businesses in particular, registration legitimizes your business as a legal entity in the eyes of your local, state, and federal government. Registration also offers certain protections for your business—for example, when you register your business’s name, other businesses in your state are prevented from using that same name. Whether you’re starting a T-shirt company, a coffee shop, or even an Amazon business, your business will be subject to certain registration requirements.
Read on to learn about the various ways to register your new business to ensure that you meet all of the legal requirements you need to open up shop.
1. Decide On A Business Structure
If you haven’t already decided on a legal structure for your business, now’s the time to do it. If you have a small, one-person operation or run your business with your spouse, you may choose to register as a sole proprietorship. Other popular business structure options include a limited liability company (LLC) or corporation (C-Corp). In all, the most common types of business structures include: Some other types of business structures include:
- Sole Proprietorship
- General Partnership
- Limited Partnership
- Limited Liability Partnership
- Limited Liability Limited Partnership
- Limited Liability Company (LLC)
Be sure to read up on the pros and cons of each business type before deciding on which structure works best for your business. Check out our guide to types of business structures to learn more.
It may help you to know that most small businesses are sole proprietorships. With a sole proprietorship, you may run your business under your own legal name, or under a different name or DBA (“doing business as”) if you wish to separate your personal and business identities.
2. Register Your Business Name
The way you register your business name will be slightly different, depending on the type of business structure you are using.
- Sole Proprietors: If you are using a DBA (company name other than your legal name), you will likely need to register your business name with your state or county by filing a DBA, also sometimes called a fictitious business name registration. Registering your business name prevents anyone else from using the same business name, and is also required in most states. Usually, you should be able to file a DBA with your state or county clerk’s office. Before filing, you’ll also need to make sure no one else is using your chosen business name.
- LLCs & Corporations: When you set up an LLC or corporation, you will register your business name with the state at the same time. Again, the rules and processes vary from state to state, so you will need to check with your state to find out how to register your LLC or corporation at a state level.
Optionally, you may also wish to register to trademark your business name, which protects the name of your business and its goods/services on a national level. Check with the US Patent and Trademark Office if you want to register a trademark for your business name or logo.
3. Register Your Business With The IRS
Next, it’s time to register your business with the IRS to get your Employer Identification Number. An EIN is like a social security number for your business that identifies your business to the IRS for tax purposes. If you do not have any employees, registering with the IRS is optional and you can use your social security number to file taxes instead. Aside from sole proprietorships and single-owner LLCs with no employees, most other businesses will need to register with the IRS and get an EIN.
4. Register For Business Licenses & Permits
The local business licenses and permits you need vary depending on your location. For example, in the city where I live, all businesses are required to file for a “Business Tax Certificate,” which registers you to pay local business taxes.
You may also need to apply for state-issued business permits, depending on your industry. Plumbers, dry cleaners, restaurants, and various other business types all have state-regulated permits they need to apply for. For example, if you plan to open your own catering business, you will need a state health permit.
Federal business licenses are also required for certain industries. For example, if you are opening your own bar, you will need a federal permit to sell alcohol.
5. Register With Your State’s Revenue Office
If you live in a state where you are required to charge sales tax, you will need to apply for a sales tax permit, also called a sales tax ID or license. This applies to almost all businesses that sell tangible goods—even if you only sell online. Typically, you apply for a sales tax permit through your state’s Department of Revenue. Your state may ask for your EIN during the tax registration process, so make sure you register with the IRS before applying for your local tax ID. You may also need to supply your business license and business bank account.
Certain types of businesses may not be subject to sales tax; make sure you know the rules and regulations in your state before you assume that you don’t need to charge sales tax.
Do I Need To Register My Small Business?
Not all businesses need to register at a state or federal level. If you have a sole proprietorship operating under your legal name and with no employees, you don’t need to register as a business entity with your state or register for an EIN. However, even freelancers will likely still need to file for a local business permit in their city or county and will be subject to local business taxes. Of course, all businesses will also need to pay federal and state business taxes come tax season.
Other Important Things You Need To Start A Business
- Domain Name: While not legally required, a website is essential for most businesses, and the site’s domain name matters. In fact, the domain name matters so much that you should check domain availability before choosing your business’s name. Your domain name doesn’t have to be the same as your business’s registered name, but it should be chosen carefully and in accordance with your brand and services. You can register your domain name with any qualified registrar.
- Business Bank Account: This isn’t really a type of registration but it’s an important part of establishing your business as its own entity. You should be able to open a business bank account once you have legally registered your business’s name, received your EIN, and received your local business license.
- Merchant Account: A merchant account is another important business establishment step for most businesses. You will need to set up a merchant account with a bank or payments company before you can process any electronic payments for your business. Merchant accounts are kind of our thing, so I encourage you to read our in-depth article on the best credit card processing companies for small businesses.
- Business Insurance: Business insurance provides essential protection for your business and should be set up early on in the process of starting your business. Learn about the different types of business insurance so you can figure out what kind(s) of insurance you might need for your business.
Almost all businesses are subject to some registration requirements, such as registering your business name with your state, registering for your federal tax ID, and registering with your state tax board. Realtors, bar-owners, mechanics, and other specialized businesses will require additional permits and licenses. Yes, business registration can be a pain, as it’s one more thing to add to your to-do list, but it’s pretty easy and straightforward in most cases.
Once you are all registered with the appropriate entities, you may need to start shopping around for business insurance, business financing, accounting software, and other startup necessities. Lucky for you, we have posts on all those topics and more in our Merchant Maverick Blog, so head on over for a wealth of free business startup information.
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