Whether you are creating a new business, or even expanding a business that you already have, it is important that the business structure is set up properly to ensure you are set up to legally operate in your state or territory and you go through the process to register a business name.
There are four points to register a business name that you must keep in mind and we will discuss in detail below.
1. The Structure Of Your Business
When registering your business, you must make sure you are registering the business as a legal entity. With this in mind, there are several options, with each option having different benefits as well as different drawbacks.
The right structure for your business is dependent on how you want to operate based on factors such as how much control you want to have, your businesses vulnerability to lawsuits as well as financing needs or obligations.
Whatever legal structure you do end up choosing, this will determine the legal documentation and requirements.
Common business types are:
-Limited liability or partnership
2. Business Name Availability
Your business legal name is required on all of your business government forms and applications, this includes but is not limited to tax documents, permits and licenses.
By default, the legal name of the actual business is the name of the person that actually owns it. For example, if you happen to be a sole proprietor, then the name of the business is your full name.
When you are in a partnership, the legal business name is the name given on your partnership agreements.
For LLC’s and corporations, the legal name of the business is the one that was registered with the state (this is the most common business structure).
3. Federal Tax ID
Any business that goes through the process of registering a business name, has employees and/or has a business partnership must get an Employer Identification Number (EIN) from the US Internal Revenue service.
4. Register With State
Depending on the type of business that you have, you will have to obtain Tax IDs and permits from your state’s revenue agency.
If you sell products within your state, and you register a business name, you are required to collect sales tax and may be required to obtain a sales tax permit or a vendors license.
These are four critical steps to register a business name so make sure to carefully follow and keep them in mind to avoid legal issues in the future.