The time it takes to register your business depends on the structure you select. You can form either a sole proprietorship, LLC or partnership.
Registration your business requires selecting a name, applying for a license and obtaining a tax ID number. Additionally, it will determine who will serve as your registered agent.
Choosing a business name
Selecting the ideal name for your business is a crucial first step in creating an effective brand. It should appeal to your target audience, be distinctive and accurately reflect your company’s identity and objectives.
It should also be easy to remember, spell and say. A business with a long name that’s difficult to recall will likely end up losing potential customers.
Finding an appropriate business name requires extensive research. This will enable you to select a name that accurately represents your venture, is available and doesn’t infringe upon any other businesses or trademarks.
Begin by creating a list of names that best represent your business and the products or services you offer. You can do this independently or with professional assistance.
Next, do a search on the Internet to check if your business name is already taken. Doing this will enable you to determine if there is another company with that same or similar name already existing and will save time in the future.
Once you’ve created a shortlist, ask friends, family and colleagues for feedback. Doing this will provide an array of opinions on your business name and provide more objective viewpoints.
Be mindful that the name you select for your business or brand will be something you must live with for years, so ensure it perfectly reflects both your personality and vision.
Though it can be tempting to think outside the box and come up with an original or humorous business name, it’s essential that you take into account your state’s legal guidelines. If the chosen title doesn’t comply with these standards, your company could face legal actions for unfair competition or trade mark infringement.
It’s wise to verify the availability of your chosen business name for a domain (.com,.net or.biz). Doing so can make it confusing for customers if they type in an incorrect website address and make it more challenging for them to locate you online.
Filing for a business license
A business license is a legal document that grants you permission to operate within an area, usually a city or county. While most small businesses need one, certain states don’t mandate them to have one.
What type of business license you need depends on your industry and location. In some instances, separate licenses from the federal government may also be necessary. Navigating this process can be complicated; spend some time researching which licenses are necessary in your area before beginning.
Every state has its own set of requirements for business licenses. To learn more about the local requirements in your area, you can visit your town clerk’s office or search online resources for helpful information.
In addition to local licensing requirements, federal business licenses may also be necessary if your business operates in regulated industries like agriculture, tobacco, firearms/ammunition/explosives, fish/wildlife management, commercial fishing and mining/drilling activities, transportation activities and aviation operations.
Obtaining a business license can take anywhere from days to months, depending on the jurisdiction and industry. Typically, you’ll submit your completed application along with any necessary fees to the appropriate agency.
Once your application has been reviewed and approved, you’ll be informed. In some cases, this means you can start operating your business immediately; however, if there are errors or lack all necessary documents included in the submission, processing time may take much longer.
Certain businesses, such as construction firms, have specific licensing requirements that can cause delays in the application process. These regulations exist to safeguard public safety and may make it challenging for new ventures to get off the ground.
If you need to determine the requirements for your industry, visit the Small Business Administration’s small-business resources page or reach out to a local small-business development center for assistance.
Gilmer stressed the importance of starting the application process as soon as possible. “The longer you wait to apply, the higher the likelihood that your application will be denied,” she noted.
Though it can be easy to feel overwhelmed by all of the different agencies you must deal with, it is essential that you take control of your licensing process from the beginning. Doing so will help avoid costly errors and guarantee your business remains compliant from day one.
Filing for a business tax ID
Many small business owners become stuck midway through loan applications, tax returns or bank account applications because they do not know their company’s EIN number. This is a common miscalculation since you do not use your EIN number daily so it can easily slip your mind.
A Business Tax ID is a nine-digit number that uniquely identifies your company to the IRS. You can obtain this number in several convenient ways, including applying online, by mail or via fax.
On average, it takes four to six weeks for the IRS to issue your business tax ID; however, this timeline can vary based on two factors: how you applied and any errors found in your application.
Obtaining your business tax ID is easier than ever with an online service. All that is necessary to begin is your formation date, legal business name and address.
You may also visit your local IRS office and fill out an application in person, though this takes more time and may not always be necessary.
When filing for a business tax ID, it’s wise to also apply for a state tax ID if your business will need to pay any taxes. These may include sales taxes, franchise taxes or employment taxes.
To determine if you require a state tax ID, research the laws in your jurisdiction regarding income and employment taxes. Some states don’t have income taxes while others impose taxation on interest and dividends.
Incfile offers quick, efficient services for small businesses and startups in Texas, Florida, Michigan and beyond. In addition to obtaining your federal tax ID number, we also assist you with applying for a state tax ID number and returning it in one day.
Once you’ve obtained your business tax ID, you can start using it to file taxes and other official documents. Doing this can help keep all your paperwork organized and secure; however, ultimately it should be stored safely somewhere where it won’t get lost or misplaced.
Choosing a business structure
Making the decision about your business structure is one of the most crucial steps you will make as a new entrepreneur. Not only does it affect taxes, liability, management requirements and fundraising capacity but it’s also necessary before registering with local, state and federal authorities.
Entrepreneurs have a variety of business structures available to them. Each type is tailored to the particular needs and circumstances. Some small business owners opt for formation of an LLC or corporation, while others rely on sole proprietorships and partnerships.
Determining the ideal business structure for your company requires consideration of several factors, such as long-term objectives, preferences and current needs. It is highly recommended that you speak with a certified business attorney, accountant or tax specialist prior to making this decision.
Your business legal structure impacts how taxes are applied and whether personal assets are protected in case the business is sued. It will also determine how much paperwork needs to be filed, how easy it is to raise capital, and what kinds of licenses and permits are necessary.
Sole proprietorships and partnerships are the two most common business structures to launch. While they require little cost-to-start up and provide limited liability protection, they lack flexibility compared to other structures.
Corporations require more time and money to establish, but can provide limited liability protection, higher tax rates and greater flexibility in how profits are distributed among shareholders. They make sense for larger businesses with multiple employees, specialized products/services or other factors that could expose them to large amounts of legal responsibility.
Limited liability companies (LLCs) are a popular business structure for startups and small businesses due to their more flexible profit sharing options. They can be formed with one member or multiple members, and taxed either as C-corporations or S-corporations.
Though you may have an idea of which structure is ideal for your business, it’s always wise to consult a qualified business attorney or tax specialist before making your final choice. A reputable firm can help weigh all potential advantages and drawbacks and guarantee that your company is structured optimally.