Registering your Small Business

New small business owners frequently ask how they should go about registering their business.  The process involves a number of steps including registering with different government agencies.  And, it is important that small business owners register their business so that they are in compliance with the law. 

The Five Steps You Need to Follow to Register your Business

Decide on a business structure

The business structure is the legal framework under which your business will operate, with the most common being: Corporation, S Corporation, Limited Liability Corporation (LLC), Partnership, or Sole Proprietorship.    The structure you choose will have legal and tax implications so it is important to understand the different types and choose one most suitable for your business.

Register your business as a legal entity

If your business structure is something other than a Sole Proprietorship, then the business must be registered in the state in which it operates.  The Department/Secretary of State, Department of Commence or Corporation Commission in your state will have the necessary documents you will need to complete in order to register your business.  A Sole Proprietorship does not need to be registered with your state.

Register your Business Name

Once you register your business, the legal name of your business is the name of the person or entity that owns the business.  If you decide to operate your business under a name other than the legal name, you will need to register that name as your “Doing Business As” (DBA) name. Registering a DBA name for your business is normally done through the office of the county clerk.

Obtain required licenses

Many businesses require a state and/or federal license (or permit) to operate.  It is important for small business owners to ensure they have the required licenses (or permits) to avoid penalties or fines.  The SBA can help you determine which licenses you may need: https://www.sba.gov/starting-business/business-licenses-permits/state-licenses-permits

Register with the IRS and your state’s revenue office

If your business has employees or your business is registered as a partnership or a corporation, then you must register with the IRS in order to obtain an Employer Identification Number (EIN), which is also known as a Tax Identification Number (TIN). An EIN is similar to a social security number but it is for businesses and you will need this number when filing your taxes.  Some types of businesses are required to have a tax registration or permit in their state especially if the business will collect sales tax from customers.