How to register a small business
This article is part of our How to start a business playbook, which covers topics like finding the right business idea, writing a business plan and finding small business loans.
Some aspects of starting a new business are exciting and glamorous. Others… less so. For most people, figuring out how to register a small business falls into the latter group. It can be hard to figure out the steps you have to take to get registered, much less actually complete them.
You probably have a ton of questions, and the good news is—we have answers! This guide is designed to help lead you through the weeds to a clear cut path for what you need to do to get your business fully registered and ready to launch.
Registering your business doesn’t happen in just one simple step (we wish), but rather different tasks you’ll have to tackle step-by-step. In the United States, registering a new business can be broken down into four main steps:
- Registering your legal or business structure
- Registering your business name
- Registering with the appropriate tax authorities
- Registering for any applicable licenses and permits your business may need
Read on to learn how to register your business and start turning your dreams into a reality!
Step 1: Choose your business structure
Welcome to the first step of registering your business! 🥳 Your first goal is to decide on your business structure, and then register your business as one of the legal entities or structures recognized by the government, if necessary. The most common business structures you can choose from include:
- Sole proprietorship
- Limited liability company (LLC)
Each structure has its own pros and cons, so it’s important to research and weigh your options before registering. Here’s what to consider before making a decision about your business structure:
- Legal liability (how much you or your business are held responsible for actions or wrongdoings)
- How you’ll be taxed
- How complex it is to form
- Flexibility of management
- Your business’s future needs
For the purposes of this guide, we’ll focus more on what the registration process is for each type of structure.
Sole proprietorships are the most common type of business structure. The U.S. Small Business Administration (SBA) defines a sole proprietor like this:
“A sole proprietorship is the simplest and most common structure chosen to start a business. It is an unincorporated business owned and run by one individual with no distinction between the business and you, the owner. You are entitled to all profits and are responsible for all your business’s debts, losses, and liabilities.”
Sole proprietor businesses are the easiest to start up, simplest from a tax filing perspective, and allow business owners to retain full control over business decisions. That’s why operating as a sole proprietorship is the simplest way to do business for most new businesses.
The important thing to note here is that, in the eyes of the government, there is no separation between you (the owner) and your business—including when it comes to debt, income, and taxes. That means your personal assets, like your house and car, could be seized to settle a business debt (yikes!).
How to register as a sole proprietor
The short answer is that you don’t need to do anything to register as a sole proprietor (woot woot). Simply start doing business under your personal name or the trade name from your “doing business as (DBA)” (if you don’t know what this is, don’t worry—we explain in the next section) and—congrats!—you’re a sole proprietor.
In reality, there are still some state and local registrations and licenses you’ll need to obtain (but this goes for all business structures). These vary widely from one state—and even one town—to the next. But, again, don’t worry—we have a section on business licenses and permits later in this guide.
However, the best way to ensure you have all your bases covered as a sole proprietor is to contact your local Small Business Development Center (SBDC). They can provide you with step-by-step instructions that are specific to your local requirements. Find your local SBDC by searching the Small Business Administration’s list.
Next up, for your consideration: partnerships. When your business is organized as a partnership, this means it has two or more business owners. Similarly to a sole proprietorship, the partners are taxed, rather than the business, which means each partner pays taxes on their share of the partnership through their personal tax returns.
Starting a partnership with someone is a big deal, so you’ll want to do a background check on anyone you’re doing business with, including a credit check and some good old-fashioned social media stalking.
Once you and any partners have decided you’d like to do business together, you’ll need to select a partnership type. There are three types of partnerships you can choose from:
- General partnership: you and any other partners are responsible for the assets, debts, and liabilities of your business.
- Limited partnership: has a mix of “general” partners and “limited” (also called “silent”) partners. The general partners manage the business and have more control, while the limited partners are minimally involved in management.
- Limited liability partnership: the personal assets of each partner are protected from any legal action taken against the partnership, and all partners participate in managing the business.
How to register as a partnership
General partnerships do not need to register with their state. Limited partnerships need to register through their state’s Secretary of State website, a Business Bureau, or a Business agency. You’ll need to file registration paperwork with your state to register as a limited liability partnership—the registration process can greatly vary by state, so do your research.
You should also create a partnership agreement for you and any partners to use internally, which lays out the processes, decisions, and operations you and any partners have agreed to. It’s not legally required or anything, but it is good to have important information like this in writing to avoid any misunderstandings or sticky situations. Here are some things you should include:
- Voting rules and how decisions are made
- How much money each partner will contribute toward the partnership
- How profits and losses are distributed
- Each partner’s roles and responsibilities
Limited liability company
Limited Liability Companies (LLCs) are a middle ground between a sole proprietorship and a corporation. They combine the best benefits from each—giving business owners the flexibility and tax benefits of a sole proprietorship with the liability protection of a corporation (we’ll cover corporations in more detail in the next section, so sit tight).
The distinction between a sole proprietorship and an LLC is primarily focused on the liability piece. As a sole proprietor, you’re personally liable for your business’s debts, so you can be sued personally for business dealings.
An LLC protects you and any other business owners from that kind of personal liability, separating you from the business in the eyes of the government. At the same time, you still benefit from the simplicity of filing taxes the same way a sole proprietor does—by passing business profits through to your personal income tax return.
How to register as an LLC
Registering as an LLC is a more intensive process than registering as a sole proprietor. You’ll start by filing formal paperwork, usually called your “articles of organization.” The information you include in your articles of organization may vary depending on your state, but all states require:
- Your LLC’s name and address
- The nature of your business
- The name and address of your LLC’s registered agent
- The names of any other managers or members of the LLC (as of filing)
Once you’ve filed your articles of organization and paid the corresponding filing fee (which can be anywhere from $100 - $800, depending on your state), you need to create an LLC operating agreement. The operating agreement outlines the rights and responsibilities of everyone involved with the LLC—even if that’s just you right now.
When you register as an LLC, you file with your state, so it’s important to research any additional steps or requirements with your state government. Psst—Wave (hi, that’s us!) has guides on how to register as an LLC in California, Florida, Ohio, and Texas.
Corporations are the most formal business structure. Registering as a corporation requires the most paperwork and upfront cost, but you get the benefit of complete personal and business separation. Incorporating also comes with pretty strict management and operating procedures that all corporations must legally follow.
Corporations can come in a variety of forms—each with their own operating requirements and tax benefits. These include:
- C corp
- S corp
- B corp
- Close corporation
- Nonprofit corporation
Each type of corporation offers different benefits and obligations. Generally speaking, though, incorporating is best for businesses that aspire to grow into medium or large companies, those with high potential for liability, and businesses that may be sold or “go public.”
How to register as a corporation
Similar to an LLC, incorporating your business means registering as a corporation with your state. Again, the steps and requirements to register will vary from one state to the next.
The important thing to know is that registering as a corporation is a lot more time- and cost-intensive. Here’s just some of the steps you’ll take to form a corporation:
- File Articles of Incorporation that detail the name and address of the business, the purpose of the corporation, names and address of the board of directors, and stock information, among other things
- Pay the filing fee, franchise tax, additional government filing fees, and attorney fees, which can cost up to $1,500
- Draft corporate bylaws that govern the management and operations of the corporation
- Establish a board of directors and hold your first board meeting
Because of the complexity and cost of registering as a corporation, we strongly recommend working with a small business lawyer or consultant to help weigh your options, take the necessary steps, and file.
Step 2: Choose and register your business’s name
Woo, we made it to step two! The next step to registering your business is ensuring you can legally do business under the awesome business name you’ve chosen. This involves a few things, including choosing a name free from existing copyright and filing a “doing business as” (DBA) with your state government. Copyright laws, trademarks, and intellectual property restrictions may apply when picking a name for your business.
Do you need to file a DBA?
Typically, if you plan to operate your business under anything but your own name, you need to register your business name. For example, if your name is Keanu Reeves and you want to call your business “Cakes by Keanu,” you’ll need to register that as your trade name by filing a DBA.
The exception here is if you choose to register your business as an LLC or corporation. If that’s the case, your registration for LLC or corporate status will automatically include registration of your business name.
However, registering as an LLC or corporation often means you must include “LLC” or “Inc.” in your business name. If you want to do business without those, you’ll need to file a DBA.
If your business will be registered as a sole proprietorship and use your name, you don’t need to file a DBA.
Abiding by copyright law
Choosing a name for your business all comes down to your preferences and the image you want your business to project. Once you’ve chosen one, it’s important to make sure that name isn’t already being used by another business. If you don’t, this would be the business equivalent of showing up to a party in the same outfit as someone else—but with actual legal ramifications.
So before you file a DBA, you’ll want to take a few steps to ensure your business’s name is free from any copyright conflicts.
- Check with your local county clerk’s office to make sure the name isn’t already registered to another business
- Contact your state’s filing office and ask how to search their database of corporations, LLCs, and partnerships
- Search the U.S. Patent and Trademark Office’s trademark database
- Lastly, do a quick Google search to see if anyone is using the name online
When you’ve checked all of those places to ensure your business name is free and clear of any copyright infringement, you’re ready to file your DBA. Contact your town or city clerk’s office (or check out their website) to find out how to file a DBA in your area.
Trademarks and other intellectual property considerations
Once you file your DBA form, your business name is protected from copyright infringement at the state level. However, a DBA doesn’t offer you legal protection, and it isn’t valid on the federal level.
That’s why it’s important to consider filing for trademark protection of your trade name. In addition to legally protecting your business name, a trademark can also include symbols, logos, or slogans your business may use.
To trademark your business’s name or visual elements, you’ll need to file with the U.S. Patent and Trademark Office (USPTO) and pay a fee between $200 - $300. Find out more about registering a trademark on the USPTO website.
Step 3: Register your small business with state and federal tax authorities
On to step three! Once you’ve registered your business’s legal structure and name, it’s time to register with all the appropriate tax authorities. This step ensures that all the right government agencies recognize your business and its tax structure. You’ll need to do this before you collect or file any taxes. For most businesses, you’ll file taxes quarterly (but more on that later!), so it’s best to register with tax authorities right away.
Register with your state revenue office
Different states will have different state-based tax laws and regulations, so you should consult with the SBA to determine the exact steps required for the state you’re launching your business in.
Obtain an Employer Identification Number (EIN)
Your next step is to register for an Employer Identification Number (or EIN) from the Internal Revenue Service (IRS), which should be a fairly painless process. Your EIN works like a social security number for your business—it’s how agencies like the IRS will identify your business when it comes to tax filings.
For sole proprietors and LLC owners who report business income on their personal tax return, you aren’t required by the IRS to have an EIN. However, in this case, you may be required to hand out your personal social security number to vendors and suppliers. That’s why we recommend securing an EIN, even if you aren’t required to.
Luckily, getting an EIN is one of the easiest parts of registering your business, which is why it’s personally one of our favorite steps. Just fill out this application on the IRS website, and you’re good to go!
Apply for quarterly tax vouchers
As we mentioned before, most businesses pay estimated taxes on a quarterly basis (every three months.) That’s because, unlike when you work for another company, there aren’t any taxes withheld from each paycheck—so you’ll make quarterly payments to keep up with your tax responsibility.
Since the IRS processes tax returns once a year, your business will use a particular voucher from the IRS to submit your payments. To request quarterly estimated tax vouchers, fill out Form 1040-ES to estimate your tax liability for the year.
Once you’re up and running, you’ll be able to submit your quarterly payments online, over the phone, through the IRS mobile app, or by cash, check, or money order through the mail.
Apply for a tax permit
Enough about paying taxes—let’s talk about collecting them. For some businesses, you’re required to charge and collect state tax on the goods or services you sell. The most common small businesses that need to collect state tax are restaurants and retail stores.
Some ecommerce businesses may also have to collect tax in certain states now, too. If you’re launching an ecommerce business, take a look at TaxJar’s guide to ecommerce sales tax.
If you need to charge sales tax, register your business with the state’s Department of Revenue and secure a permit to collect state tax. To do that, visit your state’s Department of Revenue website and search for “sales and use tax” (keep in mind, this permit might go by a different name in some states). Using your trusty EIN and other identifying information about your business, choose to register.
Step 4: Obtain applicable licenses and permits
Almost there—just one more step to cover. A few businesses might be able to skip this last step, but the SBA estimates that almost every small business requires some form of license or permit, from the local, state, and/or federal governments.
Some licenses may be required simply for the privilege of doing business in a certain location, while other licenses and permits apply to industries that are regulated in one way or another by the government. The types of licenses and permits you need will greatly depend on your business’s unique structure, operations, and location, so there isn’t a one-size-fits-all rule.
These licenses and permits are specific to each industry, so we won’t go into too much detail here. You’ll need to secure federal licenses if you’re doing business in:
- Alcohol sales
- Firearms, ammunition, and explosives
- Fish and wildlife
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and TV broadcasting
- Transportation and logistics
State licenses and permits vary widely from one state to the next. Here’s a peek at the industries usually regulated by state governments:
- Dry cleaning
Get started on registering a small business
And there you have it—the nitty-gritty on how to register a small business! You just absorbed a lot of information, so give yourself a pat on the back (...or buy yourself something nice, potentially involving chocolate).
Registering your business name and legal structure isn’t the most exciting part of starting a new business, but it’s an important part nonetheless. If you’re feeling unsure about any part of registering your business and acquiring the right licenses and permits, it’s worth chatting with a small business lawyer or consultant to ensure your business is in good shape.
BTW, Wave has articles on how to start a business in specific states, including:
By getting all of your ducks in a row from the very start, you can set your sights on building and growing your new business—without worrying about taxes or trademark lawsuits.
Another solid way to set yourself up for success is to get the right money management tools from the very start to help you save time and stay on top of your business. We don’t mean to brag, but Wave has an entire suite of easy-to-use, affordable money management tools that will save you major time so you can focus your energy on running your business. From sending beautiful invoices to accepting online payments to painlessly paying yourself and any employees, you’ll feel relieved knowing you have the tools you need to manage your money like the boss you are.
Now get out there and register your business!
The information and tips shared on this blog are meant to be used as learning and personal development tools as you launch, run and grow your business. While a good place to start, these articles should not take the place of personalized advice from professionals. As our lawyers would say: “All content on Wave’s blog is intended for informational purposes only. It should not be considered legal or financial advice.” Additionally, Wave is the legal copyright holder of all materials on the blog, and others cannot re-use or publish it without our written consent.