How are new companies typically registered?
In the United States, new businesses are typically registered at the state level. The first step is to choose a business structure. The most common structures for small businesses include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each type of business has different tax implications and benefits, so it’s important to choose the right one for your company. Therefore, let’s take a look at 6 things to have in mind when registering a new company.
1. Decide on a business structure
Sole proprietorships, partnerships, limited liability companies (LLCs), and corporations are the most popular business forms. Each kind of business has its own set of tax repercussions and advantages, so it’s vital to select the right one for your company.
For example, sole proprietorships are the simplest business structure and are easy to establish. However, you are personally liable for all debts and obligations of the business. Partnerships are similar to sole proprietorships but there are two or more owners involved. LLCs provide personal liability protection and have less paperwork than corporations. Lastly, corporations tend to be more complex and expensive to set up, but they offer the most protection for the owners.
2. Register your office address
Your business address will be used for all official correspondence, so it’s important to choose a location that is convenient and accessible for your customers or clients. Namely, a registered office address for a limited company is where all official company correspondence will be sent. This is usually the company’s principal place of business, but it does not have to be.
In some cases, you may be able to use a home address, but keep in mind that this may make it more difficult for customers or clients to find you. You may also want to consider renting office space in a shared workspace or business incubator.
Shared workspaces are becoming increasingly popular, as they provide flexible and affordable options for small businesses. Business incubators are another option, especially if you are starting a high-tech company. These are specialized facilities that provide workspace, resources, and support for early-stage businesses.
3. Get a tax identification number
A tax identification number is required by all firms. This is a nine-digit identifier given to businesses by the IRS. You’ll use this number to file your taxes and open a business bank account after you’ve established one. If you’re a sole proprietor, you can use your Social Security number as your tax ID.
How to apply?
You can apply for an EIN online, by fax, or by mail. If you have a sole proprietorship, you can also use your Social Security number instead of an EIN.
If you’re hiring people, you’ll also need to get a state unemployment tax ID number. This is used to pay unemployment taxes to the state. You may apply for this identification through your state’s Department of Labor website.
When starting a business with partners, you will need to get a partnership tax identification number. This is also known as an employer identification number (EIN). You can apply for this online, by fax, or by mail. The process is similar to applying for an EIN for a sole proprietor.
If you’re starting a corporation, you’ll need to acquire a federal employer identification number (EIN) as well. This is also known as a federal employer tax identification number (EIN). You may apply for this online, by fax, or by mail. The procedure is the same as applying for an EIN for a sole proprietorship.
4. Get a business license
You will need to get a business license from your city or county. The process for this varies depending on where you are located. You can usually find the information on your city or county’s website. This is typically a one-time fee, but some businesses (such as restaurants) may need to renew their license annually.
There may also be other licenses and permits required, depending on the type of business you are in. For example, businesses that sell food or alcohol will need to get a permit from the health department. Retail businesses will need a sales tax license. And any business that has employees will need to obtain a federal employer identification number (EIN).
5. Open a business bank account
It’s important to keep your personal and business finances separate. This will make it easier to track expenses and deduct them come tax time. It will also give you a more professional appearance when dealing with customers and vendors.
To open a business bank account, you’ll need your EIN or SSN, your business license, and a voided check. Once you have these items, you can visit your local bank or credit union to open an account. Be sure to shop around for the best rates and terms.
You may also want to consider getting a business credit card. This can be helpful for making purchases and tracking expenses. Just be sure to pay off the balance in full each month to avoid interest charges.
6. Get business insurance
Business insurance is not required, but it is strongly recommended. This will protect your business from liability in the event that someone is injured on your premises or if you are sued. There are many different types of business insurance, so be sure to talk to an agent about what coverage makes sense for your company.
In addition to general liability insurance, you may also want to consider property insurance, product liability insurance, and workers’ compensation insurance. This will depend on the type of business you are in and the risks involved. For example, businesses that involve physical labor or the manufacture of products will need to carry workers’ compensation insurance. And businesses that sell products will need product liability insurance in case one of their products causes injury or damage.
Now that you have an understanding of the basics, you are ready to start the process of registering your new company! Just be sure to do your research and consult with an attorney or accountant to ensure that you are taking all the necessary steps. Good luck!