While it’s common advice to wait until you start generating money to register your business, this can lead to many mistakes and consequences down the road. Once you have a business idea, it is always best to get it registered to protect yourself and solidify your commitment to becoming an entrepreneur. In addition, waiting to register can prevent you from doing the necessary work required to be successful. For example, you need to have a business license to purchase insurance.
Here are the five steps to follow to register your small business:
Step One: Find a Business Location
First, you must determine where you want your business to reside, even if it’s virtual. This will help determine what fees you need to pay and where to register your business. Each state has different requirements, fees, licenses, and permits to start, so be sure to do your research.
Step Two: Determine Legal Structure
Sole proprietorship, corporation, limited liability corporation, or a partnership are the different legal structures. As an entrepreneur, it is common to start as a sole proprietor, registering as a limited liability corporation. To be legal, most sole proprietorships only need to submit a DBA or “doing business as” name within the state.
Step Three: Choose and Register Business Name
Before legally operating under your business name, you must register it within your state and county. Your state and county website will have information and step-by-step instructions on registering your business name correctly. You can only do business under your legal name until you register your business name.
Step Four: Get an EIN or Federal Tax ID
Now, register for an EIN. You can look at this website here to see if your business requires an EIN or employer identification number. If not, you simply use your social security number as your federal tax ID. Those who run a partnership or limited liability corporation must register for an EIN.
Step Five: Apply Licenses and Permits
Finally, you must apply for local licenses and permits required for your business or industry. Your county government website will be the best resource in figuring out this information. You can also contact your local business and professional regulations department for more information.
When you are ready to register your business, follow these steps. Remember, each state has its own rules, regulations, and requirements that you must follow along with the federal ones. Look for your county website to find more information on what is required to register your business. All it takes is registering your business name and paying fees for many states.