Registration comes as part of the process of establishing a business in any part of the world. It's a legal requirement that entails a couple of steps. Registering a business gives certain advantages and protection against competitors and customers who may file a lawsuit or infringe on your rights. If you are new to the process of registration it may seem quite daunting, however, below is a breakdown of the steps.
Decide on a Name
You must decide on the name to give your business. Every business both big and small identifies with a name. Pick a name that means something to you and will at the same time suit the niche of the business. If you find it difficult to decide on a name try to use an online business name generator. Tools like this save you stress by giving multiple options, simply choose any that appeals to you.
It's not best to allow the product you sell to appear in the business name unless you are sure such a product will never go out of trend. You may decide to add other products at a later time hence, always keep the name neutral when possible.
Business Name Verification
There are millions of businesses in the United States alone, so there's a probability of you choosing an existing business name. Even if you think the name chosen is unique it doesn't hurt to check it against a local directory of businesses for verification.
Pick an Entity
Now, here's where the real work starts -- choosing a business entity. A business entity determines the tax filing process, daily business operations, and how much of your assets are exposed to risk. There are a few options to choose from which include sole proprietorship, LLC, C-corp, S-corp, and partnership. Here's what each of the entities offers.
A sole proprietorship is the default entity for businesses without any entity. If you're just starting, your business is considered a sole proprietorship, and any liability affects both the business and personal assets.
A business registered as LLC offers several benefits. One such is the protection of personal assets. You as an owner won't be liable to the debts of the business. Debt incurred by the business is paid by the business. Additional benefits include the flexibility of business location and less paperwork.
A corporation can be S-corp or C-corp. Which you choose determines how you pay taxes. And none is rigid because as your business grows you can switch from one form to another depending on what is suitable.
C-corp is also taxed separately and owners are protected from the liabilities of the company. Although owners are taxed twice; as a business and on personal income. There are, however, a couple of benefits to the business. A business registered as C-corp can enjoy tax deductions and have more shareholders
S-corporation is an alternative to the C-corp and gives a couple of tax advantages. Unlike the C-corp there is no double taxation as profit and the loss of corporation flows through the shareholders where each is taxed according to the shares of the owners.
The partnership entity allows for two more people to collectively run a business. It can work as either a limited partnership or a limited liability partnership. The former protects the principal owner while the partners are exposed whereas the latter protects all parties.
Find a Location
While the type of business you want to do may require office space, this is not applicable in all situations. Since the inception of online businesses what is important is an address where all your documents and tax filings will take.
Register and Trademark the Business Name
Register your business name and trademark it to avoid reuse by another business. Name registration doesn't guarantee a trademark since both are different things entirely.
Register with the IRS
Register your business with the IRS to get an Employer Identification Number. Visit the IRS website to register your business. The number received enables you to file taxes and other related activities
Open a Business Bank Account
A business bank account is essential to the process of registering a business. A business account separates personal income from that of the business, gives the business more credibility, and most importantly needs to be included in certain documents.
Register Locally and Apply for Permits
You'll need to register your business at the local government level and at the state to enable you to file payroll taxes. Industries have different requirements of operations and as such, you may need a permit to sell your products or services. Hence do well to obtain every necessary permit and license needed.
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