8 steps to register your business and set it up correctly

Launching a business is an exciting milestone, but it often comes with a fair amount of paperwork. Before officially opening your doors, you must meet certain legal and compliance requirements—steps that can feel daunting for new business owners.

This guide breaks down the process of registering your business so you start off on the right foot and move forward with confidence. While registration isn’t mandatory for every independent business owner, taking that step provides valuable liability protection and supports future growth.

Use this eight-step guide to learn how to register a company in the U.S. and prepare your business for long-term success.

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Initial questions about registering your business

As you plan your business launch, consider these initial questions about registration to see whether it makes sense for you.

Do all businesses need to register? 

Sole proprietors aren’t required to register, but formal registration becomes necessary if you choose another business structure.

What are the benefits of registering? 

Running a business as a sole proprietor offers simplicity, but it also means there’s no legal separation between you and the business. This puts your personal assets at risk in case of a legal dispute or unpaid debt. Setting up a formal business entity adds liability protection and opens the door to advantages such as loans, tax credits, and employee benefits (in case you hire staff). 

How much does registration cost? 

Costs vary by city, state, and business structure. Typically, you pay a few hundred dollars to register the business, plus additional fees for any special licenses or permits. More complex needs (such as trademark research or partnership agreements) may also involve legal fees if you work with an attorney.

How to register your business as part of a long-term strategy

Registration of your business is a key step in executing a business plan, especially when hiring employees or expanding into new markets is part of the roadmap. The registration process involves choosing the right entity structure and completing the formal requirements that create liability protection and keep the business compliant. 

While the exact process varies by state, the following steps provide a practical roadmap for most independent business owners.

1. Choose the business name wisely

Strategically select a business name that’s memorable, searchable, and free to use: 

• Memorable: Pick a name that stays with people. It should be easy to pronounce and reflect your core values.
• Searchable: Names that are too similar to existing brands or websites tend to get buried in search results. Confirm that the domain name and social handles are also available, so you aren’t competing for visibility.
• Free to use: Check the legal viability of the name. If it’s already trademarked by another business, you won’t be able to use it. (Verify availability through the U.S. Patent and Trademark Office database).

Once you finalize a name, consult your jurisdiction’s Secretary of State website for guidance on how to register a business name and follow the instructions there. ‍

2. Decide on a business structure

Your business structure sets the stage for your long-term plans, as each type of entity comes with its own legal, compliance, and taxation rules. Independent business owners most commonly choose between a sole proprietorship and a limited liability company (LLC)—both relatively flexible and low-cost.

Some business owners choose to open a franchise or form a corporation. These structures offer added personal protection but also come with more paperwork and higher costs, making them better suited for high-growth or high-risk businesses rather than independent professionals. 

3. Determine where to register the business

Registering in the right location is important. When you live and do business in the same state, the decision is simple—that’s where registration happens. 

But when the business spans multiple states, you may need to register in more than one location. In most cases, this means registering in the home state first, then as a “foreign” entity in other states. Because each state has its own process, check the official government website for instructions specific to your location.

Pro tip: If you’re a fully remote small business, register in your state of residence. It’s the most practical choice because you owe taxes where you live, even when the business is registered elsewhere.

4. Follow the state requirements for business registration and compliance

Once you understand how to set up a company in your state, the next step is to meet all local compliance obligations. Every state handles registration differently, so visit the Secretary of State website to find instructions and fees for your location.

Staying compliant also means knowing your ongoing responsibilities. For example, many states require LLCs and similar entities to appoint a registered agent—an individual or service to receive official correspondence within the state. To stay in good standing, mark your calendar for annual report and tax filing deadlines.

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.

5. Register with the IRS for business taxes

After completing state registration, you need to register with the IRS to file and pay federal taxes. This federal registration is different from state registration, so both steps are typically required. The process starts with getting an employer identification number (EIN) for tax filings and payroll in case you have employees.

If you already have a Social Security number, you can apply for an EIN online on the IRS website and receive it within minutes. Otherwise, apply by mail, which has a processing time of four to five weeks.

Keep in mind that any change in business ownership or structure requires a new EIN. And while sole proprietors don’t need an EIN, it can still be beneficial, especially when you plan to hire employees in the future.

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. Open a business bank account

The next step is separating the business and personal finances. It not only simplifies bookkeeping but also protects personal assets. Requirements vary by bank, though most ask for the business registration certificate and EIN number. 

A dedicated business bank account helps track payments and bills and maintain clean financial records for audits or lawsuits. It also reinforces that the business is a distinct entity, separate from personal finances.

7. Apply for the business licenses and permits

Depending on your industry, offerings, and location, you may need to secure specific licenses or permits. Check state guidelines or consult the Small Business Administration (SBA) to determine what’s required. Some examples include:

• Professional licenses: Mandatory for some professionals, like accountants, hair stylists, and real estate agents 
• Sales tax licenses: Required for selling goods and, in some jurisdictions, certain services 
• Home-based business licenses: Necessary in some areas to confirm that you won’t cause noise, traffic, or other interruptions

8. Get business insurance

Insurance gives your business a safety net, helping you recover from unforeseen issues or legal claims. Depending on the type of insurance, you may choose to cover employees, property, equipment, and digital assets:

• General liability: Protects against claims involving bodily injury or property damage
• Professional liability: Essential for service-based professionals (such as consultants, marketers, and accountants) to cover legal fees in case a client files a lawsuit, even if the claim is unfounded 
• Property or home-based business insurance: Insures the workspace, equipment, and inventory against damage or theft
• Cybersecurity insurance: Protects against technology‑related risks, like data breaches or cyberattacks 

Keep every client relationship organized.

Track leads, manage projects, and follow up at the right time, all from one place built for your business.

Try HoneyBook CRM

Lay the right foundation for your independent business

Once your business is officially registered, the real work begins: putting the right systems in place to operate smoothly.

HoneyBook helps independent professionals do exactly that by bringing client management, workflow automation, and payments into one place. You can start booking clients right away by creating simple end-to-end workflows—from first inquiry to final payment. Capture leads, book clients, deliver files, and send invoices without switching tools. 

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