Five Steps for Registering Your Business
Before you go in for a loan it is important to have a few items figured out, which include the business legal structure, official business name, federal tax ID, and specific licenses and permits. Having all of the right documentation confirms that you are an actual business and provides the loan lenders with proof that you are a legitimate company. The SBA has certain recommended steps that should be taken when starting up a new business.
First, you need to figure out what legal structure you will use for your business. Will you be a sole proprietorship, LLC or corporation? These decisions will depend on factors such as how much control you want to have, business’ vulnerability to lawsuits and financial needs. By deciding this you will be able to make specific decisions in regards to your business’ legal, financial and tax.
Your business’ legal structure will determine what registration forms you need to file with your state and/or local government. Each state varies in requirements.
Second, you need to register your business name. When registering a business you must register it under a legal name. If you plan on doing business under another name you must use terms such as these “Doing Business As,” “DBA,” “Assumed Name,” and “Fictitious Name” to describe what your business will be known as in the market place. If you present your business under a name other than your proper legal name without proper notification, it may be considered fraud.
By default, the legal name of your business will be your name. If you are the sole owner of the business, its legal name will be your full name. If you are in a partnership, then the legal name will be the name given in your partnership agreement or the last names of the partners. Limited Liability Corporations and Corporations use the business’ legal name that is registered with the state government.
When filling out government forms and applications your business’ legal name is required, including your application for employer tax identifications, licenses and permits. If you are planning on having a different market name than your legal name then you must file a business name registration/DBA application form with your state and local government.
Third, you need to obtain your federal tax ID also known as Employer Identification Number (EIN). If you are an employer with employees, a business partnership or corporation, or another type of organization, you must obtain an EIN from the U.S. Internal Revenue Service. The EIN is used to identify your business. The EIN is also known as an Employer Tax ID and Form SS-4: U.S. Internal Revenue Service
Number: 1-800-829-4933
Fourth, you must register with the State Revenue Agency to get a Tax ID and permit. If you are selling products and are required to collect sales tax, then you will need to obtain a Sales Tax Permit or Vendor’s License from state or local government and maybe even both.
Fifth, in most situations businesses are required to obtain a business license or permit to legally operate. Most small businesses will need to get a general business license or industry-specific operating permit from their state or local government agencies.
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