There are a number of steps to getting your business up and running. Once you’ve determined what structure makes sense for your business, it is time to register your business with federal, state, and local governments to authorize it to operate. Registering your business is a fairly straightforward and low-cost process and includes the following areas.
1. Federal and State Tax IDs
By registering, you receive a tax ID that will be your business’s personal identification number. Not only does this replace the need to use your Social Security number, it also allows you to open a business bank account that is separate from your personal assets.
2. Name
Be sure to also register your business name with the state government. If you decide to register your business name at the federal level, you’ll need a trademark. Depending on your business and state, you may also want to or need to register a Doing Business As (DBA) name as well. A DBA allows you to own and operate a business that has a name other than your own. For example, if Sam Malone did not register for a DBA, he would not have been able to name his bar “Cheers”.
3. Licenses and Permits
Depending on where your business is located and your industry, you will need to apply for the right licenses and permits with the local and state governments. It is vital to keep documentation of these licenses and permits and annually check on their status. While the approach varies, states and cities generally have an agency that manages professional licenses and provides information on what is needed on their websites.
Another area to consider is incorporation, which is the process of making your business a distinct legal entity. This gives you as the business owner some protection, legally separating you and your business. Incorporation is often more costly and labor-intensive than registering your business, but it can be worth the added protection.
Getting your business off the ground with the right paperwork is an important first step and requires a great deal of deliberation and research. However, once you have done so, you can start focusing on marketing your business.
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