Starting a business is an exciting venture, but you'll need to ensure that you've registered your business to operate legally within the market. Your business will be more likely to grow and succeed if it's recognized as a legal entity with its own rights and responsibilities (as well as liabilities). In this post, we will walk you through registering your business in the United States, highlighting the various types of businesses you can create, and what steps you'll need to take before and after incorporation. Let's dive in!
Step 1: Decide on your business structure.
The first step to registering your business is to choose its structure. This decision should be made after careful consideration because it will have a significant effect on how much you pay in taxes and what legal liabilities your company faces. The most common forms of business structures are corporations, partnerships, sole proprietorships and limited liability companies (LLCs). Each type of organization has its own advantages and disadvantages:
Corporations are designed to limit personal liability for owners/shareholders, who generally only risk their investment in the corporation if they haven't taken out enough insurance against such risks. However, corporate tax rates are usually higher than those for partnerships or sole proprietorships.
Partnerships can distribute profits among partners based on their percentage ownership share — so two partners could split profits 50/50 even if one partner worked twice as much as the other during that time period—but they face unlimited potential debts from lawsuits related to their business activity. This can be avoided if both members agree beforehand not to take personal responsibility for each other's debts incurred while working together on joint ventures.
Sole proprietorships are the simplest form of business organization, and they allow for convenient tax filings. Owners can use their personal income tax forms to report business activity without having to file separate forms. Sole proprietors also have full control over all profits from their businesses because no one else is involved in operations or financial decision-making. Sole proprietorship owners do face unlimited liability for any debts incurred as part of their job activities.
A limited liability company (LLC) is another form of business organization with several benefits. It protects the owners from personal liability for any debts incurred during operations, which can give them peace of mind if they're not sure how profitable their venture will be. It also allows partners to split up ownership in different ways, such as by percentage or equal shares.
Step 2: Choose a business name.
The next step is to choose a business name. Before you do, you should check for availability. There are several ways to do this:
Search the U.S. Patent and Trademark Office (USPTO) website for similar names
Search on Amazon to see if anyone has already registered your first choice for a domain name (or pay for it if they have)
Check with your state Department of Corporations or Secretary of State’s office to make sure there isn’t already a corporation that uses your proposed name in their title
Step 3: Register your business with the state.
The third step in registering your business is to register your business with the state. If you're starting a sole proprietorship, limited liability company (LLC), or general partnership, you'll need to register your business with the state where its principal place of business is located. You may also be required to file additional forms with your local city government and county government. These forms are usually related to taxes and employment law compliance.
The cost of registering a business varies by state but can range from $100-$300 depending on whether or not any extra fees are required for filing an assumed name certificate or other special permits or licenses that might apply to different types of businesses (such as restaurants). In order to complete this process online, all you need is your Social Security number, driver's license number, mailing address where all correspondence will go including any registered offices if applicable along with some basic information about yourself such as name, addresses, phone numbers etc. If possible, try to avoid someone else doing this t over the phone, because they will have sensitive details which could affect security systems down the line.
Step 4: Get an employer identification number (EIN).
Once you've selected a business name, one of the first things to do is get an employer identification number (EIN). This is a tax identification number that's required for all businesses and sole proprietorships.
The EIN is also crucial because it's needed to open a bank account in your business' name; without this number, you won't be able to open an account or write checks on behalf of your company. You'll also need an EIN in order to file taxes independently of your personal information; again, if you don't have one and want to open a new bank account or write checks on behalf of your company, then banks will require proof that you are who they say they are (i.e., an official IRS registration) before allowing such transactions.
Likewise with applying for any government licenses or permits—if you try setting up shop without having acquired this important piece of information beforehand, then chances are high that there won't be anything stopping anyone else from doing so either!
Step 5: Open a business bank account for your business.
Once you’ve registered your business, it’s time to start thinking about how to keep track of your finances. It may seem obvious, but having an accurate record of all the money going in and out of your business is essential for staying in compliance with tax laws. You need a bank account in order to pay taxes and bills, receive payments from customers, make deposits and withdrawals, and get credit cards or loans.
Step 6: Set up a bookkeeping system.
At this point, you have a business and are ready to begin selling products or services. You will need to keep track of all income and expenses so that the IRS can verify that your taxes were paid properly. You can use a variety of methods to do this, but it's important to choose one method and stick with it. Many small businesses use accounting software like QuickBooks Online or Xero in order to keep track of their finances, as well as payroll data if they employ people on staff.
Step 7: Register as an employer, if needed.
If you have employees, then you'll need to register as an employer. The process for doing this varies by state, but the general process of registering includes filing the following documents:
a federal tax identification number (EIN)
a state business license
a liability insurance policy
Conclusion
There are many things to think about before registering a business in the U.S. As with most things, there is no one right or wrong answer when it comes to choosing where to register your company. But there are several factors you should consider before deciding on a location. If you choose carefully, then you can save yourself time and money while enjoying all of the benefits of operating your business in America!
Learn how to grow from an entrepreneur to CEO with Blaze Group. Access community messaging, virtual co-working sessions, customizable business templates, business courses, and more — all from a single source. Try it free today. LEARN MORE