Getting a new business off the ground is a massive accomplishment, and registering it the right way is your first big step. It can seem a bit overwhelming with all the different rules at the federal, state, and even local levels.
But don’t worry, it’s totally doable when you know what to do. This guide is here to help you through the entire process of legally registering your business in the U.S., from picking the right business structure to getting all your licenses and permits.
By the time you’re done, you’ll have a clear plan to make sure your business starts off on the right foot, legally and smoothly.
11 Simple Steps to Register a Business
Navigating business registration doesn’t have to be complicated. By following these 11 straightforward steps, you can get your business legally established and ready to operate efficiently. For a comprehensive and authoritative overview of the process, including state-specific requirements, consult the official U.S. Small Business Administration guide.
Step 1: Choose Your Business Structure
Selecting the right business structure is a foundational decision that impacts everything from your personal liability to how you’ll be taxed. Your choice depends on the nature of your business, the number of owners, and your long-term growth plans.
- Sole Proprietorship: This is the simplest structure for a single owner. There’s no legal separation between you and the business. You get all the profits, but you’re also personally responsible for all business debts and liabilities.
- Partnership: A partnership is owned by two or more people. There are a few different types:
- General Partnership: All partners share in the profits and are equally responsible for the business’s debts.
- Limited Partnership (LP): This structure includes a general partner who manages the business and has full liability, along with limited partners who are just investors and have limited liability.
- Limited Liability Partnership (LLP): In an LLP, all partners have limited liability, meaning they’re not personally responsible for the business’s debts beyond their initial investment. This structure is often used by professionals like lawyers and accountants.
- Limited Liability Company (LLC): An LLC creates a legal separation between the business and its owners. This protects your personal assets from business debts and legal claims. It’s a popular choice for small businesses due to its flexibility and tax advantages.
- Corporation: A corporation is a more complex structure that’s legally separate from its owners (shareholders). There are two main types:
- C Corporation: Typically for larger businesses with many investors, C Corps are double-taxed; the corporation is taxed on its profits, and shareholders are taxed again on their dividends.
- S Corporation: An S Corp avoids the double taxation of a C Corp by passing income, losses, and deductions directly to the owners, who then report them on their personal tax returns. This structure has strict eligibility requirements.
Step 2: Name Your Business
Your business name is your identity, and it’s important to choose one that’s unique and legally available. Naming rules can vary by state, so you’ll need to check the requirements where you plan to register.
- Legal Entity Name: This is the official name you’ll use when you register your business with the state. Most states require this name to be unique.
- Doing Business As (DBA): A DBA, also known as a trade name or fictitious name, allows you to operate under a name different from your official legal name. For example, if your LLC is legally named “Acme Solutions LLC,” you could register a DBA to operate as “Acme Consulting.”
- Trademark: A trademark protects your brand nationally. It ensures that no one else in the country can use your business name, logo, or slogan. It’s a smart move to search the U.S. Trademark Database to make sure your desired name isn’t already in use.
Step 3: Draft Your Business Formation Documents
Once you’ve chosen a business structure and name, you’ll need to prepare the necessary legal documents to officially form your business. These documents formalize your business and outline how it will be run.
- Corporations need to file Articles of Incorporation with the state. They will also need to create bylaws, which are the rules for managing the company, and issue share certificates to owners.
- LLCs file Articles of Organization and create an Operating Agreement, which outlines the rights and responsibilities of the members.
- Partnerships will have a Partnership Agreement that defines each partner’s responsibilities, profit sharing, and other operational details.
Step 4: Register with the Government
This is the step that makes your business official. Depending on your business structure and location, you’ll need to register with various government agencies.
- State Registration: You’ll need to register your business with the Secretary of State or a similar state agency where your business is physically located.
- Employer Identification Number (EIN): An EIN is a federal tax ID number issued by the IRS. It’s like a Social Security number for your business. You’ll need an EIN to hire employees, open a business bank account, and file federal taxes.
- Licenses and Permits: Depending on your industry and location, you may need various federal, state, and local licenses and permits to legally operate. These could be for things like food service, construction, or retail.
Step 5: Consider Taxes and Other Costs
Understanding your tax obligations is a critical part of running a business. The type of business structure you choose and your state’s regulations will determine your tax responsibilities.
- Federal Taxes: All businesses are required to pay federal income tax. Your tax rate and reporting requirements will vary based on your business structure.
- State and Local Taxes: You may also need to pay state income tax, sales tax, and local business taxes. Some states have more favorable tax environments than others.
- Professional Help: Consider consulting with a certified public accountant (CPA) or a tax professional to ensure you’re compliant with all tax laws.
Step 6: Open a Business Bank Account
Separating your personal and business finances is essential for liability protection and simple accounting. Once you have your EIN and formation documents, you can open a dedicated business bank account.
- Required for Corporations and LLCs: If you’re an LLC or a corporation, a separate bank account is a legal requirement to maintain the separation between your business and personal assets.
- Smart for All Businesses: Even if you’re a sole proprietor, a separate business account makes it much easier to track expenses and revenue, which simplifies tax season.
Step 7: Set Up Your Payment Infrastructure
To start selling, you need a way to get paid. Setting up a payment system allows you to accept money from customers seamlessly.
- Payment Processors: A payment processor, like Pay.com, lets you accept various payment methods, including credit and debit cards, ACH transfers, and digital wallets like Apple Pay.
- Flexibility and Security: Look for a solution that’s secure, easy to integrate with your website or point-of-sale system, and offers the flexibility to accept payments from customers wherever they are.
Step 8: Protect Your Intellectual Property
Your intellectual property (IP) is a valuable asset that needs protection. Taking steps to secure your IP early can prevent others from using your ideas, brand, and creations.
- Trademark: A trademark protects your brand identity, including your business name, logo, and slogans. This prevents other businesses from using similar branding that could confuse customers.
- Copyright: Copyright automatically protects original works of authorship, such as writing, music, art, and software code. You can also register your copyright with the U.S. Copyright Office for stronger legal protection.
- Patent: A patent protects new inventions, giving you exclusive rights to your product or process for a set period. The patent process can be complex and lengthy, so it’s best to start early if you have an invention you want to protect.
Step 9: Get Business Insurance
Protecting your business from unforeseen events is a crucial part of long-term success. Business insurance can help you manage risks and protect your assets.
- General Liability: This is a good starting point for most businesses. It covers common risks like customer injuries and property damage.
- Professional Liability (E&O): Also known as Errors and Omissions insurance, this is vital for service-based businesses, as it protects against claims of negligence or mistakes in your professional services.
- Other Types: You may also need other types of coverage, such as property insurance, workers’ compensation, or cyber liability insurance, depending on your business and industry.
Step 10: Build Your Online Presence and Marketing Strategy
Once your business is legally registered, it’s time to tell the world about it. In today’s digital age, a strong online presence isn’t a luxury; it’s a necessity. Your marketing strategy is what will connect you with customers and drive growth.
A professional website acts as your business’s digital home base, giving you a credible platform to showcase your products or services, share your story, and provide essential contact information. It’s a central hub where all your marketing efforts can lead.
Social media is also an indispensable tool for marketing. Platforms like Facebook, Instagram, and LinkedIn allow you to build a community around your brand, engage directly with customers, and gather valuable feedback.
It’s a cost-effective way to increase brand awareness, share updates, and run targeted advertising campaigns that reach your ideal audience. Beyond a website and social media, don’t overlook other marketing channels like email marketing, content creation (blog posts, videos), and search engine optimization (SEO) to ensure your business is easily discoverable online.
By investing time in these areas, you can create a powerful marketing ecosystem that attracts and retains customers, setting your business up for long-term success.
Bonus Step 11: Establish a Strong Operational Foundation
As your business begins to take shape, it’s crucial to think about the day-to-day operations that will make it run smoothly. This includes creating a solid business plan that outlines your goals, strategies, and financial projections.
Even if you’ve already registered and have a bank account, a detailed plan will serve as your roadmap for the future. You’ll also need to set up a reliable system for bookkeeping and accounting.
This ensures you can track income and expenses accurately, which is essential for tax season and for understanding your business’s financial health. Finally, if you plan to hire employees, you’ll need to set up a payroll system and understand your legal obligations as an employer.
This includes everything from drafting employment contracts to providing benefits and ensuring a safe work environment. Taking these steps early on will help you build a robust and scalable business from the ground up.
Navigating the Registration Process
Registering a business in the U.S. involves navigating a few different levels of government: federal, state, and local. The process might seem complex, but by tackling each level one by one, you can ensure your business is fully compliant and ready to operate.
Federal Registrations and Filings
For most small businesses, federal registration isn’t required to legally exist as an entity. The main reason to interact with a federal agency is for an Employer Identification Number (EIN), which is essentially a Social Security number for your business.
You’ll get this from the IRS, and it’s a must-have for everything from opening a business bank account to hiring employees. Other federal registrations are usually for specific purposes, like protecting your brand nationally.
- Employer Identification Number (EIN): Obtain this federal tax ID from the IRS. It’s required for hiring employees and opening a business bank account.
- Trademark: File with the U.S. Patent and Trademark Office (USPTO) to protect your business name, logo, or slogan nationwide.
- Tax-Exempt Status: If you’re a nonprofit, you’ll need to register with the IRS to be recognized as a tax-exempt entity.
- S Corporation Election: If you choose to be an S corp, you must file Form 2553 with the IRS to elect for this tax status.
State-Level Requirements
This is where the core of your business registration takes place. If you’re forming an LLC, corporation, partnership, or nonprofit corporation, you’ll need to register your business in any state where you have a significant presence.
- When to Register: You’re typically required to register in a state if you have a physical office, a significant portion of revenue comes from that state, or you have employees working there.
- Where to File: You’ll generally file with the Secretary of State’s office or a similar business agency.
- Filing Methods: The process varies by state, with some offering convenient online registration while others require you to file documents by mail or in person.
Local and County Regulations
While you usually don’t need to register your business entity with local governments, you may need to apply for local business licenses or permits.
- Licenses and Permits: These are often required for specific industries (like food service or construction) to ensure you’re complying with local safety and zoning laws.
- Doing Business As (DBA): If you plan to operate under a name different from your legal business name, you’ll likely need to register a DBA with your county or city.
- Check Local Websites: The best way to figure out what you need is to check your local city and county government websites for specific rules and forms.
Simplifying the Process With Professional Services
For many entrepreneurs, navigating all these rules can feel a bit overwhelming. That’s where business registration services come in. Companies like Northwest and Tailor Brands can simplify the entire process.
They offer comprehensive support, from helping you choose the right business structure to handling all the paperwork for federal, state, and local registrations. These services can be a huge time-saver and can provide peace of mind, ensuring your business is set up correctly from day one.
Determining Your Registration Needs
Before you dive into the registration process, it’s a good idea to first figure out if and how your business needs to be registered.
Your business structure and where you plan to operate are the two key factors that will guide this decision. By making these choices upfront, you can make the entire registration journey much simpler and more direct.
Do You Need to Register?
The short answer is: it depends. If you’re a sole proprietor operating under your own legal name, for example, if “Johnny Depp” is a freelance graphic designer and invoices clients as “Johnny Depp, “you may not be required to formally register your business with state or local authorities.
However, if you plan to operate under any other name, such as “Johnny Designs,” you will need to register that name, typically as a “Doing Business As” (DBA).
Even if you’re not legally required to register, there are significant benefits to doing so. Registering a formal business structure like an LLC or a corporation provides crucial personal liability protection.
This means your personal assets, like your home and savings, are legally separated from your business’s debts and liabilities. Without this protection, you could be held personally responsible for business-related lawsuits or financial obligations.
Formal registration also opens up opportunities for legal and financial advantages, such as easier access to business loans, certain tax deductions, and a more professional image with customers and partners.
Key Factors to Consider
- Business Structure: Your chosen business structure is the most important factor. If you’re a sole proprietor or a general partnership operating under the owners’ names, you might not have to register at the state level. However, if you form an LLC, corporation, or limited partnership, you will be required to register with the state to be recognized as a legal entity.
- Business Name: If you want to use a name for your business that’s different from your own legal name, you must register it. This is typically done as a DBA (Doing Business As) at the state or county level.
- Location: The state and local governments where you conduct business will have their own unique rules. Even if you’re a small online business, if you have employees or a physical presence in a state, you may need to register there. It’s important to research the specific requirements for your location to avoid any compliance issues.
Answering Common Questions About Business Registration
Starting a business often brings up a lot of questions, especially for the logistics of registration. Here are some of the most common concerns entrepreneurs have and their straightforward answers.
What Are the Essential Steps to Register a Business in the U.S.?
The process is straightforward. You’ll need to choose a business name and confirm its availability, then select your business structure, such as an LLC or corporation.
After that, you must file the necessary formation documents with your state’s Secretary of State. Finally, you’ll need to obtain an Employer Identification Number (EIN) from the IRS, which is required for hiring employees and opening a business bank account.
What Are the Potential Costs of Registering a Business?
The costs vary by state, but you can expect to pay a few different types of fees. This includes filing fees for your business formation documents, as well as annual or biennial report fees to maintain your business’s legal standing.
You may also have to pay for a registered agent service and various state and local licenses and permits. While budgeting between $250 and $1,500 for the initial setup is a good starting point, it’s always best to check your specific state’s fee schedule for an accurate estimate.
Can a Non-U.S. Citizen or Resident Start a Business Here?
Yes, absolutely. The U.S. encourages global entrepreneurship, and there’s no citizenship or residency requirement to own a business. The registration process is largely the same for non-citizens.
However, you’ll need a valid U.S. business address, must comply with U.S. tax laws, and should consult an immigration attorney to ensure your visa status allows you to work for the company and that you are compliant with all regulations.
Do I Need a U.S. Social Security Number to Register a Business?
No, you do not. While a Social Security Number (SSN) is commonly used for identification, a non-citizen can form a business without one. Instead of an SSN, you’ll be able to use your Individual Taxpayer Identification Number (ITIN) to file taxes.
You can also apply for an Employer Identification Number (EIN) for your business even if you don’t have an SSN or ITIN. However, it’s important to note that many U.S. banks will require either an SSN or an ITIN to open a business bank account.
How Does My Visa Status Affect My Ability to Operate a Business in the U.S.?
Your visa status is crucial because it dictates what activities you’re legally allowed to perform in the country. While you can own a business on many types of visas, you may not be permitted to work in or actively manage that business.
For instance, a B-1 business visitor visa allows you to attend meetings and negotiate contracts, but not to actively work for or receive a salary from your company.
To legally work within your business, you’ll need a visa that grants work authorization, such as an E-2 treaty investor visa or an L-1A visa for managers and executives. It’s highly advisable to consult with an immigration attorney to ensure your plans align with your visa status.
Bottom Line
To register a business in the US, you must first choose a business structure and name, then file the necessary documents at the state and sometimes local levels.
You’ll also need an EIN for tax purposes and to open a business bank account. By following the above steps, you can ensure your business is legally compliant and ready for success.
