How to Register a Business Entity
Though the formation of a business entity takes just a few simple steps, it is important to spend time planning your business ahead of time. Write a well thought-out business plan, including a description of the business, marketing, finances and management. Contact local business leaders and mine them for information. Take your time and formulate a solid plan before moving forward on the steps to form your business entity.
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Instructions
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Research the structure of the various business entities. Choose a business entity from either a corporation, general partnership, limited partnership, limited liability company or sole proprietorship. There are tax and legal implications for each choice, so understand the pros and cons of each one. You may want to consult an attorney or accountant before making a selection.
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File with the applicable Secretary of State. Once you have decided upon the legal form of your business entity, you must register it with the Secretary of State in the state in which you will operate the business. When the papers have been filed and the process is complete, your business entity is legally formed.
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Contact the Internal Revenue Service and apply for a Federal Employer Identification Number (FEIN). All legal businesses in the United States must obtain a Federal Identification Number for taxation purposes, unless it is a sole proprietorship. If your business intends to buy products for resale, then a sole proprietorship should obtain a FEIN to be used to avoid paying sales tax on items purchased for resale. You can register with the federal government online and receive an identification number immediately (see Resource section below). There is no charge to obtain an identification number.
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Register with the applicable state taxation entity. To operate a business within a state, you must register it for tax purposes. Taxation levels vary based on services offered and items sold. Depending on your product or service, you may be required to collect state sales tax.
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Obtain any necessary county and city licenses and permits. Though many cities and counties do not require local business licenses, it is best to check with both to make sure. To check on the county level, contact the office of the county commissioner. To check on the city level, contact the city clerk's office.
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References
Resources
- Photo Credit business image by peter Hires Images from Fotolia.com
