6 Essential Steps To Register Your Business

So you've chosen to establish your own company. It's now time to register it. The procedure of registering a business varies depending on the type of activity you're beginning, the size of the operation, and the state you live in. We'll go over the fundamentals of registering your business below. However, keep in mind that Square does not give legal or tax advice, and this article is not a substitute for legal or tax counsel.

1. Choose Business Structure 

The initial step is to select a business structure. The business structure (also known as a business entity) you choose affects how you file taxes, how you run your firm on a daily basis, and how much of your personal assets are at risk if your business fails. Because the business structure you choose has such a large impact, it is critical to accomplish this first.

Here's a quick look at some of the most prevalent business structures.

Sole proprietorship

This is the most common type of business form. If you never choose a business structure but still run your company, you are labeled a sole proprietorship. A sole proprietorship does not divide your business and personal assets and responsibilities.

Partnership

A partnership is a commercial form for two or more persons who own a company jointly. Partnerships come in a variety of forms. In a limited partnership (LP), one member (the general partner) is personally liable, while the other partners (the limited partners) have limited liability. Limited liability partnerships (LLP) shield all participants from the business's debt.

Limited liability corporation (LLC)

This business structure protects the business owner's personal assets from the liabilities of the business. An LLC's revenues and losses are usually taxed as personal income or loss to the members.

C-Corp

This structure separates your business from the owners (the shareholders). That is, the firm can be taxed, make a profit, and be held legally responsibility for its activities independently of the shareholders. As a result, this structure provides the best security for an owner's personal assets. Because the IRS considers a C-Corp to be a separate company for tax purposes, it is conceivable to be taxed twice: once when the C-Corp produces a profit and again when dividends are given to shareholders.

2. Find a Location 

After deciding on the ideal business structure for you, you must choose a location. That doesn't mean your company has to have a physical location. When it comes to registering your business, it refers to the address you use for tax filings, getting vital paperwork from government organizations, and opening a business bank account.

3. Register Your Business Name 

The next step is to register your name. Typically, registering a business name is part of the process of forming separate entities such as LLCs and corporations. However, if you want to form a sole proprietorship or partnership under a name other than your own (for example, if your name is John Smith but you want your business name to be something different), you may need to submit a DBA (a "doing business as" name).

Existing LLCs and corporations can also use a DBA to register other firms under them. If you own a cafe and wish to operate another under a different name, you would file a DBA. It maintains both the original and second cafes as one legal business with two distinct names.

A DBA may not be required as part of your business registration in some states. But, before you register your name, be sure it's legal. You should also consider trademarking it. A DBA does not automatically guard against the name being used elsewhere.

4. Register with IRS 

Following that, you must register your business with the IRS in order to obtain your Employer Identification Number (EIN). Your EIN is similar to a Social Security number for your business and is required for tax filing. You can sign up for one online by clicking here. Again, there may be times when you do not require one. The IRS provides a simple survey you may fill out to discover if you do.

5. Register with State and Local Agencies

After you have completed all federal registrations, you will most likely need to register your business with one or more state or local government organizations, such as revenue offices. If you intend to operate payroll, you may also be required to register with your state agency in order to file payroll taxes.

6. Apply for Licenses and Permits 

Finally, ensure that you have all of the necessary licenses and permits to begin serving consumers. Each industry may have its own set of requirements. Fortunately, the US Small Business Administration has made it simple to look for the permissions and licenses you require by inputting your location and type of business.

Once you've registered your company and completed the necessary paperwork, you can concentrate on the more enjoyable aspects of your job: spreading the word and providing outstanding service.