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Guide to registering your business: 6 steps

Learn about the benefits and nuances of registering your business so you can set yourself up for long-term success.

Person signing documents and registering their business

If you run a small business or are looking to start a business, registering your business is a step you may want to take. Though it isn’t necessary for all independent businesses, such as sole proprietors, registering as an entity has many benefits. It can protect your personal assets legally and position you for long-term growth, especially if you want to expand into new markets and hire employees. 

Take these six steps to register your business, plus learn about the benefits of registering with your state to become a legal entity. 

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Common questions about registering your business

Before we lay out the steps you need to register your business, let’s answer some of the most common questions. You might be wondering if registering your business is even necessary, or if it comes with any costs. 

Do you have to register your business?

Your business structure determines whether you need to register your business and how to register your business. A sole proprietorship is when there is no legal distinction between you and your business. This means your assets and liabilities from your business are inseperable from your personal assetts. This is a common arrangement for photographers, virtual assistants, and other service-based independents. 

For permits and local business registration requirements, you can look up your state and its specific requirements through the Small Business Administration.

What are the benefits of registering your business?

Even if you aren’t required to register your business through your state, there are still benefits of registering. Especially if you operate an independent business, registering ensures that your business is its own entity, which protects you from personal liability in the case of disputes. 

Financially, registering your business can also make it easier to access loans and tax benefits, like exemptions and credits. 

If you’re interested in growing your business, registering your business is essential for providing employees with benefits, like health insurance, retirement plans, and more. 

How much does it cost to register a business?

The costs of registering a business all depend on your location and business structure. Registering your business name as well as registering your business entity, can be up to a few hundred dollars depending on taxes. We recommend finding fees on your state’s government website.

You may also need to get specific licenses and permits for your business, which will have different fees depending on the type and location. Additionally, if you retain a business lawyer to handle things like intellectual property, partnership agreements, and trademark research, you’ll need to factor in legal fees as well. 

1. Choose your business name

Selecting your business name can take a long time, and that’s because there are several factors to consider. 

On one end, you need to consider your brand and choose a name that’s memorable, unique, and easy to use. 

Furthermore, you should also consider the searchability of your business name. Does it have the potential to show up in search, or is it already coming up for another site or entity? Also consider if you would be able to use your preferred domain name and social handles. 

At the same time, you need to consider the technical aspects of your business name. It should be free for use, meaning another business isn’t using it or has it trademarked. To find out if a name is trademarked or not, check out the USPTO trademark database.

2. Decide on a business structure

To register your business, you’ll need to determine the business structure you want to use. For most independent business owners, you’ll likely choose from the following: 

  • Limited liability company: A limited liability company (LLC) primarily protects owners from business liability, and they offer more flexibility in management and taxation. 
  • Sole proprietorship: A sole proprietorship is very common for independent business owners since it’s an unincorporated business operated by one person. Though the sole owner has full control over the business, that also means that they’re personally liable for the business as well. If you want to use a sole proprietorship for your business, you don’t need to register it. 
  • Franchise: A franchise is best-suited for high-growth independent businesses. In a franchise, an individual or entity can operate a business using the franchisor’s brand and operational systems. 
  • Corporation: Corporations are entities that are completely separate from their owners, giving owners the highest protection from personal liability. For independent owners, corporations also have benefits like the ability to pay yourself a salary. Though corporations offer higher protections, they do come with some of the highest operating costs as well, such as income tax. 

When considering how to structure your business, you want to think about liability, management, taxes, and future plans. Each type of business entity operates under a distinct set of taxation and other rules, so planning ahead by understanding which entity is the best fit for you now and in the future will help set your business up for success.

Pro tip

Work with a legal expert to help ensure you’re choosing a name that’s legally available and picking the best legal structure for your business type.

3. Determine where to register your business

Once you know which business name and structure you want to use, you need to determine where to register your business. Your business location is easy to determine if you only conduct business in one state–that’s where you’ll need to register.

If you operate in multiple states, you’ll want to register in your “home” state as a domestic entity and registers as a “foreign” entity (also known as a Certificate of Authority) in other states. To do this, you can simply apply in the states where you conduct business. Keep in mind that the names for this document may vary from state to state. 

If you sell your services online across multiple states, do some research about where the best state to register is for your business structure. When in doubt, register in the state you live in.

4. Follow your state requirements for registration

Now that you have your business name, structure type, and location, it’s time to move forward with registering your business. You’ll do so with the Secretary of State in your primary business location. Different states require different steps for registering, so it’s important to look up the specifics.

In California, for example, you can register either in person or online, and there’s a unique form to use depending on your business entity. 

5. Register with the IRS for business taxes

Along with registering your business with your state, you’ll also need to register your business with the IRS so you can pay proper business taxes.

To do so, all you need to do is apply for an employee identification number (EIN). If you change your business ownership or structure, you’ll need to apply for a new EIN. 

Pro tip

Having an EIN is essential if you have employees, and it’s required for LLCs, franchises, and all types of corporations. It isn’t required for sole proprietors, but you can still apply for one. 

6. Apply for any business licenses you need

The last step in registering your business is applying for business licenses. As an independent business owner, you may need any of the following: 

  • Professional licenses: These include licenses and certifications for businesses in certain fields, including accounting, hair stylists, insurance agents, real estate agents, and more. 
  • Sales tax licenses: If you plan to sell goods, you’ll need a sales tax certificate through your state or locality. Some areas may even require sales tax for some services, so it’s important to look into your area’s specific requirements. 
  • Home-based business licenses: Certain home-based businesses may need licenses to confirm you won’t affect traffic, create noise, or cause any other environmental interruptions. Again, these are specific to your locality and state.

Lay the right foundation for your independent business

When you’re just starting your business, it’s the best opportunity to get set up for long-term success. From resigning professionally to building your network, there are several steps you can take. Along with registering your business, it’s important to use the right tools to manage your business. 

Within a clientflow platform like HoneyBook, you can manage your entire process of selling and delivering your services, from capturing leads to retaining client relationships. With everything in one place, that means you’ll have data about your financials, lead sources, expenses, and more. As you grow, you can rely on data about your business to make more informed decisions.

Start your business off successfully with HoneyBook

Get started with HoneyBook so you can track leads, book clients, and view your financial data in one place.

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