Registering your business is the first step to creating an established presence in your market.
Before you even think about local marketing, you need to make sure your business actually exists in your location first. In order to be recognized as a legal business entity and start doing business in any given state, you need to learn how to register a company.
Business registration is a process that almost every business owner must go through—and even when it’s not required, it comes highly recommended. Going through with this simple, one-time process will allow you to get a business bank account and unlock a wide variety of funding options that can help your company scale faster.
Read this article to get all the information you need to know about how to register a business before your target launch date hits.
When you’re following a new process for the first time, it’s natural for there to be bumps in the road. However, taking some extra steps to prepare for your company registration can help you ensure that the process goes by smoothly and as quickly as possible.
Here are three actions you should take before you begin the official registration process.
1. Pick a business structure
If you didn’t already select a business structure while writing your business plan, now’s the time to do so. The legal business structure you select for your company will determine what documents you need to complete to register your company—and it’s not a decision you want to take lightly. Your business structure will directly affect how your business operates in the future.
Here are the four most common business structures that you can choose from and how they impact your tax payments and personal liability:
- Sole proprietorship: This basic structure means you are your business—though you are still allowed to hire employees and grow—which makes registration simple or not even required. Taxes are also simple, as your business income is lumped into your personal income tax return. However, sole proprietorships put you, your credit, and your personal assets at risk in the case that you default on a loan or get a lawsuit.
- Limited liability company: While you can’t bypass registration with an LLC, you do receive the benefit of protection from personal liability since this type of business structure makes your company an entity that is separate from you. Plus. you won’t be double taxed like a corporation.
- Partnership: A general partnership is best described as a sole proprietorship for a business with multiple owners. You avoid double taxation and can easily register your business, but you assume personal liability.
- S corporation: The most common corporate entity, S corporations provide a higher level of personal liability protection than LLCs, while still only being taxed once. You also take on more shareholders and investors, though you’re subject to corporate regulations, like required meetings and higher tax service costs.
2. Choose a business name
If you plan to operate under any structure other than a sole proprietorship or partnership, you’ll need to select a unique business name to submit during the registration process. Most states require your company name to be distinct from that of any other company in your industry that’s already been registered. When you register your company, your business name will be registered by law, too.
If you plan to operate as a sole proprietorship or partnership and want to work under a business name that’s not your own name, you will need to submit a separate “doing business as” filing. This filing will let you use what’s referred to as a fictitious name for all your business activities.
Some business owners choose to also register their business name through the U.S. Patent and Trademark Office to give them extra security for their brand.
3. Select a registered agent
Unless you’re operating as a sole proprietor, your registration process will require you to submit the contact details for a registered agent. This is an important decision to make, because the person you select will be in charge of accepting any official documents, which may include lawsuits. If they miss a delivery, your company can take the hit.
You can choose anyone who is over 18 years old and lives in the state you’re registering in—including yourself or your family members. However, the reason we recommend thinking about your choice prior to your registration is due to the fact that many business owners choose to sign up for a registered agent service. This can help you avoid the risk of missing deliveries when you’re out of the office for lunch, vacation, sick days, or other standard events.
How to register a company
Once you’ve completed your prep work, you’re ready to sail through registration and get your new business started. With American entrepreneurs starting well over half a million businesses every month, this is a process that plenty of people go through—and one that you can complete from home, too.
In this section, we’ll explain the requirements set by every level of government so you know exactly what to expect.
Because United States businesses are mainly registered at the state level, the federal government part of your registration is simple. All you need to do is apply for a federal tax identification number known as an employer identification number (EIN) by clicking “Apply Online Now” on this IRS page.
An EIN is required for any business that pays employees or is structured as a partnership or corporation, but getting an EIN is a good idea for any business owner. This is because pretty much all suppliers of business credit cards, business bank accounts, and loans require at least an EIN as proof that you’re really running a business. Plus, EINs don’t cost anything to apply for and own.
S corp owners need to take one extra step in federal registration by completing Form 2553 and submitting it to the IRS.
State registration is the most time-consuming part of business registration for corporations and LLCs, as it requires you to complete fairly lengthy paperwork and pay fees. However, the process remains straightforward and is something any business owner should be able to complete at home.
Owners of limited liability companies must submit a legal document called the Articles of Organization to register a company. Known as the Articles of Formation in some states, this becomes the official documentation of your company name, office address, registered agent, and even your purpose. It can cost anywhere from $50 to $500 to submit this paperwork, as state fees vary widely.
Owners of corporations, however, must submit the Articles of Incorporation, which is similar to the paperwork for LLCs but adds information about who is on your board of directors and how many shares of stock you’re giving out. This paperwork can cost around $100 to $250.
A blank copy of these documents can be found on the website or at the physical address of whichever state government office or agency handles business registrations. In most states, this is the office of your Secretary of State, which can also provide you with more information if you get stuck in the process. This office can also inform you if you need to complete any annual filings to maintain your business entity.
Some states may require all business owners (including sole proprietors) to apply for a state tax ID number, separate from your federal tax ID number, as you’re launching your business. If you are planning to operate in multiple states—this includes if you will have employees in the state or plan to earn a large amount of revenue there—you must register in each of these states and have an eligible registered agent within each one.
While you don’t need to submit any official documentation to start doing business in your city or county, you may need to apply for and maintain a business license or permit to operate in some areas. Your local government websites are your best resource here since laws vary based on your zip code, industry, and type of business structure. You may need to pay a couple hundreds of dollars in fees to apply for a license or permit and up to $100 for renewal each year.
If you get stuck in your search, you can always search online for “business license requirements” with your city or county name to get guided to the right resource.
Start your operations
Registering a company isn’t as complex as it may sound. The business registration process can be lengthy, but as long as you know what to expect, you can be prepared with the necessary information and fees.
As soon as your documents have been processed and your EIN and business licenses are in your hands, it’s time to start thinking about how you’re going to make your business a success. Learn how to grow a business on any budget to take your company to the next level.