How to register your business: a beginner’s guide
- Before you can register your business, you must identify your business structure, select your location, and pick your business name
- You must register your business name, register with the IRS and relevant government agencies, and obtain necessary business licenses and permits
- Once you register your business, you can focus on reaching new customers
Starting a business is an exciting, life-changing endeavor filled with opportunities and responsibilities. As a business owner, you make decisions every day, and you also ask questions.
When starting a new business, a key question is how to register your business. With this guide, you’ll learn about the steps to take before registering plus the actual registration process.
3 requirements before you register your business
Business registration is a step-by-step process that requires you to determine three essential bits of information about your business. Here’s how to start:
1. Identify your business structure
Your business structure is the type of legal entity you want your business to be. There are several types of business structures, each with their own costs, risks, and tax implications. The business structure you choose depends on your priorities as a business owner.
The types of business structures include:
- Sole Proprietorship: This option designates one person as the owner. This structure is easy to set up, but the owner’s personal assets are at risk.
- Partnership (General or Limited): A partnership means the business is owned by more than one person. All parties share the risks and profits.
- Corporation (or C-Corporation): This structure separates the owner from the business entity. Owners are not personally at risk. However, this is more complicated to set up.
- Limited Liability Company (LLC): As the name suggests, an LLC limits the liability for a company and protects your personal assets.
- Limited Liability Partnership (LLP): Similar to an LLC, an LLP reduces the liability of multiple owners.
Keep in mind that your choice of business structure will determine:
- The steps you go through during your business registration
- The taxes you pay
- Your financial responsibility as the business owner
- Your ability to get loans and funding from banks and other parties
To make the right choice, research the different types of business structures, take note of their pros and cons, and identify the most suitable one for your business.
2. Select your business location
Location, location, location. You’ve heard this mantra when it comes to choosing a home, and it’s the same when selecting your business site. The registration process for businesses varies from state to state, and so do the business taxes you must pay. As such, selecting your business location is a significant decision to make.
Here are several questions you’ll want to ask yourself:
- Can you work from home or does the nature of your business require a location separate from your house?
- Will your business provide a service, sell products, or manufacture and sell products?
- Do you want to set up your business in the same locality or state where you reside or are you looking at a different state?
- Who is your target audience?
- Do you need a location in an area with a large population of your target audience?
- Can employees, suppliers, and customers easily get to your location?
- Can you afford the cost of doing business in this location, including rent, utilities, etc.?
3. Pick your business name
When coming up with a business name, you want to stand out from the crowd. A creative, descriptive, or fun business name can make a lasting impression on potential customers. It’s also a necessary part of registering your business.
Based on your business structure and your location in the United States, your business may have two different names:
- A legal name: This is the name your business is legally required to have based on your business structure. There are legal name requirements for each type of business structure. For example, sole proprietors must have their surname in their business name.
- A brand name: There are instances where a business owner may want their business name to be different from the legal name—this is where a brand name comes in. Brand names are used for public promotion while legal names are reserved for legal documents and records.
To pick the right business name, consider your answers to the following questions:
- Does the name fit with your type of business and brand?
- Is the name simple and unique?
- Is the name being used by another business?
- Have you confirmed that the name is not already trademarked?
- Is the domain name (website name) still available?
- Is the name still available on social media?
How to register your business in 4 steps
When you have your business structure, location, and name selected, you can begin the registration process. Here’s how to register your business in four easy steps:
1. Register your business name
You can register your legal name as your business name by filing documents such as articles of incorporation or articles of organization at the state level. The necessary documentation will depend on your business structure and location.
If you’re using a brand name that’s separate from your legal name, some states may require that you register a “doing business as” name—also known as a DBA, assumed name, trade name, or fictitious name.
In some states, a DBA registration can be done with the local county clerk instead of a state agency. Either way, be prepared to pay a filing fee. You might also have to publish your DBA in your local newspaper as a notice to the general public.
Once your DBA is registered with your state or county clerk, the name will no longer be available for anyone else to use. You can confidently use it to sign contracts and open a business bank account.
You can also register your business name as a trademark in your state and at the federal level when you want to do business across many states or internationally.
2. Register with the IRS
You must register with the Internal Revenue Service (IRS) to obtain your federal employer identification number (EIN). This number identifies businesses for tax purposes just like a Social Security number identifies individuals.
Even though it’s not compulsory for some types of business structures to register with the IRS (e.g., some sole proprietors), many still do because of the benefits it provides, such as:
- The option to apply for a business checking account
- Better business credibility that can attract vendors, suppliers, and creditors
- Ability to apply for government contracts
3. Register with relevant government agencies
You must register with the state where your business is located. You may also need to get a state tax ID number.
Most local government agencies are responsible for providing permits and licenses, which you may need based on the nature of your business (read more about these in the next section). You may also be required to register your DBA or trade name in your local city or county, if you’re interested in using one.
In most cases, it’s not mandatory to register with the federal government except when:
- You’re interested in federal trademark protection
- You need a federal employer identification number
- You want to enjoy tax exemption because your business is a charity or nonprofit
4. Obtain necessary business licenses and permits
Again, depending on the nature of your business and business structure, you may need to get specific permits and licenses at the federal, state, or local level.
Simply put, a business license is a document that allows you to operate your business. Some licenses may require you to take an exam—such as those for professions in law, accounting, and medicine—while others may only need you to register for a permit or license.
A permit is a government-issued type of license that regulates public safety. It’s usually granted after an inspection. For instance, a restaurant or any business involved in the preparation of food will likely require a health permit while a home-based business will need a home occupation permit.
Register your business like a pro
Before you can register your business, you need to identify your business structure, select a business location, and pick a business name.
Depending on your business structure and location, you may need to register your business using the following steps:
- Register your business name
- Register with the IRS
- Register with relevant government agencies
- Get required business licenses and permits
Once you register your business, it’s time to let people know. One of the easiest ways to do this by creating a business page on review sites like Yelp. It’s free and can instantly connect your business to potential customers.
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The information above is provided for educational and informational purposes only. It is not intended to be a substitute for professional advice and may not be suitable for your circumstances. Unless stated otherwise, references to third-party links, services, or products do not constitute endorsement by Yelp.