How to Register a Business Properly

Registering your business is one of the first steps in actually getting started with your operations. Without registering, you cannot run some business structures legally. Learning how to register a business may seem overwhelming, but these simple steps help break it down.

Step 1: Choose a Legal Structure

Your business is a legal entity, and you will need to decide on the structure that works best for you, both legally and financially. This may be a sole proprietorship, corporation, LLC, or some other similar type of structure. You cannot register until you have first chosen the legal structure, because this determines some of the steps in the process.

Step 2: Register Your Name

You will need to register your business name next. In order to do this, you may need to set up a “Doing Business As” account with your local bank.

If you do not take the steps to register a business name, then your name is the name of the business. This works well for a sole proprietorship and a business that focuses on providing a freelance service, but it will not work well for other types of businesses. You must have a legal business name that is properly registered in order to open a shop, file federal government forms, and apply for licensure or tax permits.

This registration is done on a local level. Check with your state’s local business offices to find out more details about how to do this. There is typically a small fee associated with establishing a business name.

Step 3: Federal Tax ID

Most businesses that have employees, function as a partnership or corporation, or simply want to separate business and personal finances need an Employer Identification Number (EIN) from the IRS. Once you have your business name, you can apply for an EIN online through the IRS website. This is the number you will use on your taxes to identify your business.

Step 4: Apply for Any Necessary Licenses or Permits

If your business is required by federal or state laws to operate under a license or permit, then this is the final step in learning how to register a business. A general business license is almost always required. Again, this is typically done on a state level, so start researching your options locally. If you have your Doing Business As account, EIN, and properly registered business name, this is typically not a difficult process. It takes time, but it is time well spent to ensure that you are operating your business legally the moment you open your doors.