Choosing your business name, setting up your business accounts, registering your business, and many other details are all needed before you can open your doors.
Before you second-guess your decision to become a small business owner, know that while it may seem overwhelming, it is easier than you think.
Setting up a small business can be a bit overwhelming. Becoming a small business owner takes more than simply filling out some forms and filling them at your local county office.
1. Deciding on a Business Structure
After deciding on your business name, the most important decision is what structure you will set up your business as a legal entity. Before starting your business registration, you must decide if you want to set your business up as a sole proprietorship, partnership, limited liability corporation, S corporation, or corporation.
If you decide to structure your business as anything other than a sole proprietorship, you must register your business with your state and file specific documents they require.
If you choose to be a sole proprietor, the only paperwork you will need to file is the paperwork for a trade name if you will be doing business under any other name than your own.
2. Registering Your Business Name
No matter your state, you must file the appropriate paperwork if you choose to do business under a trade name.
Until you file the correct paperwork, you cannot do business under your trade name. Instead, the legal name of your business will default to your given name.
To find out specific rules and regulations about your state, check out their website.
3. Registering with the IRS
One important step in business registration is obtaining an employer identification number, EIN. Most business structures will need to apply for an EIN through the IRS.
The IRS uses the EIN to track income, social security, and Medicare taxes. If you are starting a business with no employees, you can use your social security number to administer your finances.
4. Register With Your State Revenue Office
Not only will you need to pay federal taxes, but you will need to pay state and local taxes as well. Register with your state revenue office when applying for your employer identification number.
You must apply for a tax permit if you sell goods or services where you will receive sales tax. Check their website to ensure that you know exactly what your state requires.
5. Businesses Licenses and Permits
The final step in the business registration process is registering for any business licenses and permits you may need. You may think you don’t need to apply for a business license or permit because you are running a business out of your home or own an online store.
However, most states, no matter how small or where the business is located, require a business license or permit to operate the business.
Check their website to determine if your state requires you to obtain either. Most state websites can give detailed instructions on what you must do and all the forms you may need to start your business.
Starting a small business should leave you feeling overwhelmed and out of sorts. With the onset of the Internet, the process has become more streamlined and user-friendly.
Along with state websites, there is a host of valuable sources that you can turn to that can assist you in starting your small business.