How to Register a New Business in 6 Easy Steps

So you’ve decided to start a business. This is definitely an exciting — if not stressful — time for you. You’ve laid out all of your strategies and plans, done your research, and selected the perfect location (or decided to keep it online). Now it’s time to make it all official and register your business with your state.

Registering your business is important for the following reasons:

1. Allows you to hire full-time employees and pay them in accordance to state laws.
2. Legitimizes your business
3. Assures your business is in compliance with the law

Although important, registering your business can be a tricky process. This why we are giving you a step-by-step guide to ensure you don’t miss anything important. Let’s dive in.

1. Decide a Business Structure

Before registering your business, decide on how it will be structured. This is integral to selecting the proper registration that facilitates the process. Depending on which business structure you choose, it will affect the following:

1. How you file your taxes
2. Daily operations
3. Risks and assets

Here are a few of the most common structures you can choose from:

1. Sole proprietorship: your business and personal assets and liabilities are not separated.
2. Partnership: two or more people own a business together.
3. Limited liability corporation: business owner protects assets from personal liabilities
4. C-Corp: makes your business a separate entity from owners (shareholders)

Once you decide on a structure that is the right fit for you, you can better work on registering it.

2. Select a Location

Every business has a location they need to use in order to file their taxes, host your business bank account, and receive important documents from the government. The location doesn’t necessarily have to be the location of the business, but it is encouraged and recommended.

In some cases, such as if you have a business hosted online, it may be best to use your home address. Having an address ready and available is integral to registering your business once you go to fill out the application.

Not sure where to plant your seeds? Look into the best state to start your business.

3. Register Your Business Name

No business is complete without a name. You can register it as an LLC, corporation, or DBA. Before you register your name, make sure it is eligible for use or trademark it. This is especially true if it is registered as a DBA, because it does not guarantee your name will be protected from reuse else.

A good business name will help your business flourish and assist with marketing efforts. Here are a few things to keep in mind:

1. Target audience
2. Location
3. Industry
4. Service
5. Competitors

Do not settle for a business name simply because it is not registered yet. Take the time to decide on what will be the face of your company going forward.

4. Register With the IRS

This next step is very important. Every new business must register with the (Internal Revenue Service) IRS to earn your Employer Identification Number (EIN). This number is necessary for filing taxes and is how your state will recognize and keep track of your business. Under certain circumstances, your business will not need one, so make sure to contact your state to see if you qualify.

What is the IRS?

The IRS is a bureau of the Department of Treasury of the United States that is tasked with inforcing income tax laws and overseeing collection of income taxes. If your business is not registered with the IRS, there can be serious consequences including having to pay large sums of money in fees and penalties. You can have your business shut down or be sentenced to spend time in jail.

5. Register With State and Local Agencies

On top of registering with the IRS, you will need to register your business with state and local agencies. These include revenue offices, bank offices, and tax agencies.

It is important that you ensure your registration is complete. The last thing you want is for your business to be flagged for violating certain state regulations. It could be at risk for being deemed unable to conduct business simply because you missed a deadline or did not get a communication from an agency for the required paperwork. Look into the requirements of your state and local government to get started.

6. Apply for License

The final step in registering a business is applying for a license. First, you must conduct research and decide if you need a business license. Each industry and state has different requirements. Once you know what is required of your business, you can fulfill the final step and apply for the right licenses and permits. Before you know it, your business will be an established entity ready to service its community and make customers happy.

Are you ready to register your business?

This article does not necessarily reflect the opinions of the editors or management of EconoTimes.