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Before your business can begin operating, it needs to be registered with state and local agencies. And before registering your business, you will have to choose a business name and obtain an employee identification number (EIN) from your state. While this process will register your business as a legal entity, there are other benefits as well, such as your company getting business approval from local agencies and ensuring the security of your intellectual property.
Check out our one-page checklist above with the basic steps to register your business. Note that some steps may not be required depending on the regulations of the state where you operate. Check your local regulations for specific state-by-state instructions.
Step 1: Prepare to Register Your Business
When starting a business, you should first register it. The first steps involve choosing a business name, setting up an address to receive important documents, and obtaining an EIN.
Here is the process you should follow to prepare to register your business:
- Choose a business name: If you plan on operating as a sole proprietor, your business name might just be your full name. Otherwise, you’ll have to file a doing business as (DBA) with the state. If you’re incorporating a business, you should choose a name that properly describes it. Consider web domain availability when picking a name.
- Select a location to receive important documents: You will need an address to receive essential registration documents from local and state government agencies. You’ll also need an address before opening bank accounts or applying for loans.
- Obtain an EIN: You can get an EIN through the Internal Revenue Service (IRS), which will be used in all your financial transactions. It is free and can be obtained in minutes online or by fax or mail..
Step 2: Choose Your Business Legal Entity & Open A Business Bank Account
We recommend all businesses register as a legal entity, such as a limited liability company (LLC), S corporation (S-corp), or C corporation (C-corp). This protects your personal assets in case of legal action against the business. You can register in some states for as little as $35, while others charge up to $2,000. The chart below shows the LLC costs in each state.
Costs to register an LLC vary drastically from state to state.
Before choosing an entity, consider the differences between the entity types:
- LLC: LLCs are the most common legal entity chosen by business owners. It requires the least documentation and the least amount of yearly maintenance and is the most affordable type of entity. The LLC can elect S-corp status for tax purposes, saving small businesses thousands of dollars in taxes each year. You can use online service LegalZoom to help set up your LLC. Note that LLCs are different from LLPs (Limited Liability Partnerships).
- S-corp: An S-corp is a federal tax designation to give tax breaks to small businesses. To become an S-corp, you must set up payroll, have fewer than 100 shareholders, and issue only one class of stock. The business doesn’t pay taxes at the corporate level; instead, shareholders bear these on their own individual tax returns. Additionally, unlike an LLC, business ownership can be easily passed without triggering an expensive tax event.
- C-corp: This entity type is typically used by larger companies or those seeking investments. You are required to organize this way if you have more than 100 shareholders. The C-corp has unlimited growth potential because it raises money through selling business shares, and another advantage is that even after the owner leaves, the business still exists. The major drawback is that a C-corp is taxed twice, at both the corporate and individual levels.
- B Corporation (B-corp): This is a for-profit company that has been recognized and certified for providing significant social and environmental benefits. To qualify, a company will need to pass an assessment by B Lab—an international network that grades companies on their transparency, accountability, and sustainability practices—and make a legal commitment to be accountable to all stakeholders (not just company shareholders). B-corps often attract more employees and supporters and build a great public reputation. However, maintaining B-corp status is challenging and will require that profit not be your main priority.
Once you have a business name and an EIN and are incorporated, you can open a business bank account. Bluevine is an excellent choice for a digital-only business checking account; in fact, it is one of our select best small business checking accounts. You can earn 2% APY on balances up to $250,000.
Every bank will have different requirements for opening an account, which can vary depending on how your business is organized. Check out our guide on how to open a business bank account for more details.
Step 3: Register Your Business With the State
Once you have a legal entity and are registered with the IRS, you need to register with your state. There are two ways you can register your business with the state:
- Do it yourself through the state’s website: You can register your business directly through your state’s official business website. Fees will vary depending on your state and business structure but will generally not exceed $300 in total, and the process usually takes up to 30 days. If unsure of your state’s website, you can go to the Small Business Administration’s website and use a drop-down menu to select your state.
- Use an online legal service: If you don’t want the hassle of trying to register your business through your state’s website, you can use an online legal service. This service will walk you through the process step-by-step, collecting and submitting the necessary information to the state. IncFile is a great option that will register your business as an LLC for free, plus state fees. Check out more options on our list of best online legal services.
Note that you may be able to register online, or you might be required to file paper documents physically or in person; it depends on your state’s rules.
Once you register your business through the state, there are two more things you should do. These may be concurrent with registering your business with the state:
- Choose a registered agent: A registered agent is someone you designate to represent your business and who the state will contact if there are legal actions against your business. They are also responsible for reregistering the business each year. Typically, this is someone in the business, or it could be an online legal service such as IncFile.
- Get your state taxpayer identification number: If you are in a state that collects a state income tax, you will need to register for a state taxpayer identification number (STIN). If you are a sole proprietor, you’ll need your social security number to register for this number. If you are a legal business entity, then you’ll need your EIN. Visit your state’s official Department of Revenue for more information.
Lastly, if you intend to do business in more than one state, you’ll need to file for foreign qualification in each state (aside from your home state) where you intend to conduct business. Check with the appropriate state offices to find out the specific requirements and fees—at the very least, you’ll need to file a Certificate of Authority. Note that once you obtain the qualifications, you’ll have to pay business taxes in all the states involved.
Step 4: Get State Licenses & Local Permits
Here are some of the licenses you may need at the state and local levels, depending on your business type:
- State professional licenses: These licenses are typically for businesses that may pose a public health risk. Each state may require different professions to obtain a professional license. Common licensed businesses include martial arts, cosmetology, physical therapists, and pawn shops. Visit your state and city’s official business license website for more information.
- Local licenses and permits: Local licenses vary by state. If you plan to open a physical location, you may need a local building inspection to ensure the facility’s safety. If you plan on selling food, you’ll need health-code inspections. Live music venues also require specific local licenses.
- Home-based business license: The number of people running businesses from home began skyrocketing during the COVID-19 pandemic. According to the US Small Business Administration, about 19 million small businesses are home-based. Most home-based businesses won’t need licensing. However, if you have employees, have customers, or create products at home, you might need this license. Consult your state and local government for regulations.
Step 5: Secure Your Intellectual Property
While it isn’t required to start your business, you may want to register a trademark, copyright, or patent for your business. Here are the three types of intellectual property licensing:
- Register a trademark: This provides increased legal protection for a word, phrase, symbol, and design. It protects your business branding, keeping others from using it. You can register your trademark on your own from the United States Patent and Trademark Office (USPTO). However, you may want to use an affordable online service like LegalZoom instead. If you file a patent or use a professional service, a trademark costs anywhere from $250 to $2,000.
- Obtain a copyright: Every piece of content you create has an automatic copyright. You can register your creative work with the US Copyright Office for additional legal protection. If you ever need to file a copyright infringement, you first need to register it with the US Copyright Office.
- File for a patent: This keeps others from making, using, and selling your invention for a limited number of years. Filing a patent involves many individual fees, but the basic filing fee costs anywhere from $64 to $320; claims in excess of three can cost up to $480. Keeping all the costs, fees, and conditions in mind can be complicated, so it is best to hire a patent attorney to assist you.
Step 6: Report Beneficial Ownership Information
US companies are now required to provide information about their owners and controllers to the Financial Crimes Enforcement Network, which is a bureau of the US Department of the Treasury.
If you are a new company and have just finished registering your business, you have 90 days in which to file this initial report. You can learn more about these reports and how to file them on the Financial Crimes Enforcement Network website.
You may also need to obtain a Federal Tax ID; the US Small Business Administration provides guidance for filing on its website.
Frequently Asked Questions (FAQs)
Click through the sections below to learn more about the steps to perform to fully register your new small business.
As a quick summary, you’ll need to choose a business name and location; obtain an Employee Identification Number; choose a business entity type; register with the state and local governments; get any permits you need; secure intellectual property protection; and report beneficial ownership information.
This will depend on the state where you register, but generally speaking, expect to spend between $40 and $500 for the registration itself. Additional actions like getting trademarks and patents or getting legal assistance may add at least $2,000 to your expenses.
Yes. Federal, state, and local websites almost always contain comprehensive guides and resources to help you complete the necessary registration steps. You can also hire private assistance via online legal services.
Bottom Line
Before your business can get started, you need to perform the steps in this guide to put your company in a position to succeed right away. If you follow this process while registering your business, you can stop potential future problems before they arise. This will keep your company legal from day one and ensure you can focus on running and growing your business. Be sure to download the checklist above to help you navigate the steps needed to get your business off to a successful start.
