If it is in the books, it is legitimate. Or if you have a record of it, it means it has happened. From opening an account on Facebook to taking up a course at any summer school, you can access the element without registration. Businesses are no different; the first step of running a business is registering it. In technical terms, “Business registration is the act of incorporating a company under a particular jurisdiction.” If you want to run a business, as a free person, then it is wise to register it as soon as possible. Furthermore, now is the best time to start a new business even though when you are short on funds or fear that a bad credit score won’t let you qualify for a small business loan. Why is this the best time to start a small business? With alternative lenders offering business loans at every corner, you don’t have to worry about money coming in. So, what are you waiting for?
We know business registration can be daunting, so we have compiled a step-by-step guide so that registering your business gets as easy as singing the ABC song.
- Find your business jurisdiction.
After you have a business idea in mind, the next step is to research all the potential jurisdictions. Analyze and assess all the possible jurisdictions and pick the one that is perfect for your business. We are emphasizing on this point because laws and regulations of the jurisdiction remain applicable to your business. For example, you can’t run a weed business in Nebraska or Idaho, as weed hasn’t legalized there yet! Other than this, you should consider the economic advantages and disadvantages as well. Running an agricultural business where water is not suitable for your greens, how will it turn out? Hence, it is important to wisely select business jurisdiction. Once, the small business owner has finalized it, the registration and licensing can commence.
- Pick a business structure!
So far, you have had a business plan and a preferred jurisdiction, the next step is to choose the business structure. Don’t take this decision lightly, for the business structure has an effect on the payment of taxes, rewards and discounts, and on permits. It is wise to consult an expert on it before you knock at expert’s door, look at the types of the business structures so that you know what you are dealing with!
- Sole proprietorship
If you are unsure of the demand for your product and services, then this business structure is perfect! As the small business manager is the sole owner, so he or she is responsible to file taxes. Moreover, if your business categorizes as a sole proprietorship, there is no line between personal assets and liabilities and business assets and liabilities. Majority of startup businesses opts for this business structure.
If two partners are running a small business, then their business comes under the partnership. If you are running a business with multiple owners, you register your business under this category.
It is further divided into two different categories:
– Limited Partnership
– Limited Liability Partnership
The only difference between the two is about control.
- Limited Liability Company (LLC)
A fine line of difference is present between personal and business assets, if your business is categorized as an LLC, you are obligated to file self-employment taxes. If you are financially stable and don’t want to hurt your personal assets, register your business as an LLC.
- C Corporation
In a C corporation business, only one or two persons have the ownership and each owner is responsible for own corporate tax.
- S Corporation
If it is difficult for you to meet the lending criteria of a C corporation, then apply for an S corporation. There is no effect on the corporate, personal taxes matters the most. There can be 100 owners of an S corporation and when one of them leaves there is no effect on the business.
- B Corporation
The ownership of the B Corporation revolves around only one person. These corporations use growth and profits from the business to enforce positivity in the community. All B corporations file taxes in the same manner as C and S Corporation.
These are the major types of business structures, so register under the one that is perfect for your business.
- Pick a name and business domain.
The next step is to register your business name; to be creative, for this is a one-time opportunity. The entire process of registering your business under a trademark depends on the business structure of your business. Be aware of plagiarism and identity theft.
Register your business under the jurisdiction that you are following. Once you have registered the name of your business, you don’t have to sit on the fear of someone else running a business under your name. As the rules for business name registration vary from the state to state. So, take a step after conducting all the research.
- Contact IRS (Internal Revenue Service)
So far, you have had a business plan, a business structure and a business domain. So the next step is to get in touch with the Internal Revenue Service. Get in contact with the IRS and ask for the Employee Identification Number (EIN). If you have employees, then getting, an EIN will help in the payment of taxes. If you don’t have employees, then you can use your social security number to file the taxes.
- Get all the permits and licenses!
From local business operating licenses to building permits, depending on the type of the business you have to pay, register, and apply for the relevant licenses. In addition to this, you need an occupational license, in case you are running a clinic or mental health facility. Moreover, without a state business operating license you won’t be able to run your business properly. If you are selling liquor, then you need a permit and a seller’s license.
Lastly, if you are obligated to cover the sales tax, then get in contact with the Department of Revenue of the very state you are living in.
The list is long, so you must do your homework and get all the relevant permits and licenses so that no authority can doubt the legitimacy of your small business.
If you are both the employee and the employer of the business meaning you run a sole proprietorship, then you don’t need to register your business. But this does not mean that you are not obligated to pay the taxes.
There is no escape from registering a small business, so follow these simple steps and run an official and legal business. If you are facing any financial difficulties, then head over to the official website of the Merchant Advisors and apply for a small business loan. For more ideas and funding options, you can follow us on Twitter (@Onlinecheck) and Facebook (@Onlinecheck). If you have any question, feel free to call us on our toll-free number at (833) 827-4412, our loyal and keen financial advisor will answer your every question and guide you throughout the way.