The notion that every business begins with a great idea can inspire the entrepreneurial spirit in just about anyone, but it doesn’t quite capture the full story. To transform your idea into an actual company, you’ll need to register your business. Registering your business determines who owns the business, how you’ll be taxed, and other critical details about how your business will operate. Business registration is especially important for partnerships, or businesses that you’re running with other people, but all entrepreneurs should plan to eventually register their business.
In this article, you’ll learn how to register a business in the United States and gain access to registration instructions and supporting materials for your specific state. If you’re considering starting a business or are actively getting one off the ground, go ahead and bookmark this article so you can refer back during each step of the registration process.
Want to jump ahead? Use the below links to find your state's resources for each action:
- Confirm your business name is available
- File your business application
- Apply for a state tax ID
- Apply for any applicable licenses or permits
Disclaimer: This content is for informational purposes only and should not be construed as legal or financial advice. Always consult an attorney or financial advisor regarding your specific legal or financial situation.
Choose a business structure
From the outside, all businesses might seem relatively similar — one or more people selling goods or access to their services. However, there are several different kinds of business structures, each with specific benefits and challenges. The type of structure you choose will determine business ownership, liability, and taxation.
Comparison of different business entities
Let’s compare the different types of business entities so you can pick the structure that best represents the business you want to form and will work best for you long term.
Disclaimer: This content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.
Sole proprietorship
A sole proprietorship business is owned and managed by one person. Legally, there is no distinction between the business owner and the business itself. This makes the taxes associated with the business quite simple, but comes at a cost — the owner is personally liable for the business and therefore their personal assets are at risk if the business can’t pay its debts.
- Ownership: One person
- Owner liability: Unlimited personal liability
- Taxes:
- Self-employment tax
- Personal tax
- Requirements: None
| Pros | Cons |
| Easy to set up | Owner's assets are at risk |
| Low fees/costs | Difficult to raise capital |
| No need for EIN |
Doing Business As (DBA)
The Doing Business As (DBA) structure is a bit unique, as it does not represent a legal entity. This structure exists to allow individuals to operate their businesses under a trade name, which is protected when you register as a DBA. From a liability and tax perspective, DBAs are similar to sole proprietorships.
- Ownership: One person
- Owner liability: Unlimited personal liability
- Taxes:
- Self-employment tax
- Personal tax
- Requirements: None
| Pros | Cons |
| Allows individuals to have a trade name to conduct business | Personal assets of owner are at risk |
General partnership
A general partnership is run by two or more partners, who share in the business profits, losses, and assets. This business entity is similar to the sole proprietorship, but involves multiple people. The partners are personally liable for the business, unless it is specifically set up as a limited partnership. This form of partnership is relatively easy to set up or dissolve.
- Ownership: Two or more partners
- Owner liability: Unlimited personal liability
- Taxes:
- Self-employment tax
- Personal tax
- Requirements: Written partnership agreement
| Pros | Cons |
| Easy to set up | Partner's assets are at risk |
| Low fees/cost (compared to corporation) | |
| Easily dissolved if one partner leaves |
Limited Liability Partnership (LLP)
In a limited liability partnership (LLP), two or more partners run the business. Unlike limited partnerships, where one managing partner is held personally liable, in an LLP all partners enjoy limited liability — they are only liable for up to the amount they’ve invested in the business. An LLP is a common entity for law firms, real estate agents, and other organizations where individuals work somewhat independently while pooling resources.
- Ownership: Two or more partners
- Owner liability: Partners are liable up to the amount they’ve invested in the business
- Taxes: Taxes pass through to partners
- Requirements:
- Written partnership agreement
- Must comply with government requirements around documentation, reporting, and meetings to maintain status.
- Management responsibilities must be equally divided
| Pros | Cons |
| Limited partners can leave without dissolving partnership | Harder to set up and maintain |
| Creditors cannot go after limited partners if partnership fails | |
| Partners can share benefits without management |
Limited Liability Corporation (LLC)
In many ways, the limited liability corporation is the best of both worlds between partnerships and corporations. In an LLC, owners experience the liability protection of a corporation, meaning that their personal assets are not at risk if the business fails. Furthermore, limited liability corporations have a simpler tax structure, where taxes are passed through to the partners' personal taxes.
- Ownership: One or more people
- Owner liability: No personal liability
- Taxes: Personal tax or corporate tax
- Requirements: None
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| Pros | Cons |
| Easier to set up and maintain than a corporation | Laws for LLCs can vary by state |
Related: Check our comprehensive guide on how to start an LLC in 6 steps.
Corporation - C corp
A C corp is a type of corporation that is considered legally distinct from its owners, who are shareholders in the corporation. This means that the corporation goes on even as owners come and go (by buying or selling shares) and that they are protected from personal liability. C corps pay taxes on their profits, and those profits can in some cases be taxed again for the personal shareholders as part of their personal taxes.
- Ownership: One or more shareholders (individuals or legal entities)
- Owner liability: No personal liability, except in cases of fraud
- Taxes: Corporate taxes on profits and, in some cases, shareholders are taxed for their portion of the profits on their personal taxes
- Requirements: Must comply with government requirements around documentation, reporting, and meetings to maintain corporate status.
| Pros | Cons |
| Asset protection | More expensive than partnership or sole proprietorship |
| Privacy | |
| Tax savings | |
| Easy to transfer ownership |
Corporation - S corp
An S corp is a type of business that passes all of its tax obligations through to its shareholders’ personal income taxes, avoiding corporate tax rates entirely. However, there are more restrictions and limitations on the S corps than C corps, namely, its allowed size. This means that businesses over 100 people, or with shareholders that are not US citizens, do not qualify for S corp status.
- Ownership: 1 - 100 shareholders; all of whom must be US citizens
- Owner liability: Limited personal liability for business debts
- Taxes: Personal tax
- Requirements: Formal maintenance requirements
| Pros | Cons |
| Asset protection | More expensive than partnership or sole proprietorship |
| Privacy | Restriction on number of shareholders |
| Tax savings | |
| Easy to transfer ownership |
Corporation - B corp
A B-corp balances profit and purpose by meeting specific standards for social and environmental benefit, public transparency, and legal accountability. These businesses are committed to delivering some sort of public good in addition to accumulating financial gains.
- Ownership: One or more people
- Owner liability: No personal liability
- Taxes: Corporate tax
- Requirements: Must meet certain standards of performance and pay annual fees
| Pros | Cons |
| No legal liability | Not currently available in all states |
| Annual fees |
Corporation - Nonprofit
As the name suggests, a nonprofit is an entity that exists not to earn a profit, but to serve a charitable, educational, religious, or scientific purpose. These businesses enjoy tax-exempt status, but they also cannot distribute any profits to their owners or shareholders.
- Ownership: One or more people
- Owner liability: No personal liability
- Taxes: Tax-exempt
- Requirements: Must comply with government requirements around annual reports, minutes, meetings, etc. to maintain status.
| Pros | Cons |
| No legal liability | Laws for nonprofits can vary by state |
| Tax exempt |
Register your business with your state
Part of registering your business involves registering with your state government. This will let you legally operate your business in the state and set you up for future tax filings. How you register and how much it costs will vary based on your state. For example, in Virginia, it costs $100 to form an LLC, but this costs $50 in Colorado.
Disclaimer: Fees are accurate at time of publishing, please refer to your specific state to confirm current pricing.
Keep reading this section to learn about the state registration process and to find links to filing your business application.
Confirm the business name is available
First, you’ll need to confirm your business name is available for registration. This will reserve this name for your business, so no one else in your state can use the same name as you.
Select the link for your state from the list below to access a lookup tool to see if your business name is available — however, please note that these tools are not necessarily a definitive way of determining that the name is available.
When checking for a business name, be sure you also consider whether a website domain is available for that name. You can use GoDaddy’s domain name search tool to check your preferred business name’s availability. Having a domain name that matches your business name makes it easier for customers to find your website.
File your business application
Once you have confirmed that your desired business name is available in your state, it’s time to begin filing your business application. This might also be a great time to purchase your business domain, so you can claim the domain that works best for your business and get started with establishing your online presence.
Find your state in the table below to get started with the business application process.
Apply for state and federal tax numbers
Depending on your business structure, you may be required to file federal and state taxes on behalf of your business.
Federal: Obtain an employer identification number (EIN)
An employer identification number (EIN) is also known as your federal tax ID. Think of it like a social security number for your business — a unique, 9-digit number issued by the IRS to identify your business for tax administration purposes.
New businesses should obtain an EIN to:
- Open a bank account
- Hire and pay employees
- Apply for a business license
- Filing tax returns
You can get your EIN by applying online through the IRS website.
State: Apply for a state tax ID
In addition to your federal tax ID (i.e. your employer identification number or EIN), you may need to obtain a state tax ID if your business will pay state taxes, such as income taxes or employee taxes.
Find your state in the table below to get started with confirming whether you need a state tax ID and, if necessary, applying for one.
File taxes on a timely basis
Filing taxes on time is as important for your business as it is for you as an individual. Business taxes can be filed online or by mail, but are subject to different deadlines than your personal taxes. For more information, check out the IRS business taxes website, which has a great deal of helpful information and resources.
If you’re pressed for time, consider hiring a CPA to ensure your taxes are filed correctly and on time.
Obtain appropriate licenses and permits
Some businesses will need to obtain certain licenses and permits, which can apply at the federal and state levels.
Determine if your business requires a license or permit
Businesses will need to obtain a license or permit if their industry or activities are regulated by a federal and/or state agency.
Federally mandated permits impact a fairly narrow group of business activities, ranging from manufacturing or selling alcoholic beverages to operating commercial fisheries. To learn whether your business might need a federal license or permit, check the Small Business Administration website, which lists the business activities that are of concern on a federal level, and how you can go about applying for the associated permit.
State licenses and permits apply to a wider range of businesses, but as you might expect, they can vary a great deal from state to state. We recommend checking with your local Secretary of State office before beginning your registration process to understand what sort of licenses or permits you might need based on your industry and your state’s regulations.
Apply for the appropriate license or permit
In the below table, you can find your state’s licensing requirements and begin the application process. While not all states require licensing, your city or county may have special requirements. When that is the case, the state website will typically direct you to your county or city sites for more details.
Get any required insurance
In addition to the licenses and permits required by the federal, state, or local government where you intend to operate your business, you may also need to obtain business insurance. The federal government requires all businesses with employees to have workers’ compensation, unemployment, and disability insurance.
There are also state-specific and industry-specific insurance requirements — consult your state’s Secretary of State office to learn if you are required to purchase certain insurance types for your business. Even if this is not strictly required, some business owners may appreciate the protection from unexpected costs, especially when you as an owner are not protected from personal liability.
There are six common types of business insurance:
- General liability insurance, which protects any type of business and its owners from claims related to injuries, property damage, and other expenses resulting from your business’ products or services.
- Product liability insurance, which protects businesses that manufacture and sell products from damages related to injuries caused by their products.
- Professional liability insurance, which provides service-based businesses (such as medical practices) from financial loss related to malpractice or errors.
- Commercial property insurance, which covers businesses with physical and/or property assets (such as retail stores) from losses related to damage of their company property, such as from natural disasters or vandalism.
- Home-based business insurance, which is a homeowner’s insurance supplement for businesses that are run out of the owner’s home.
- Business owner’s policy, which helps small business or home-based businesses by bundling together other typical business insurance coverages into a single package.
Apply for trademarks or copyrights
Your business idea and products are valuable and worth protecting! By applying for the appropriate trademarks or copyrights, you can ensure that your business and livelihood are protected from use by others.
A trademark can be applied to business assets, such as a name, logo, or slogan, to protect it from other businesses. Any business that considers its branding a distinguishing factor that separates it from the competition might want to invest in a trademark. For example, a trademark on your business slogan or logo means that a competitor down the street can’t market their products or services with the same language or imagery. The US Patent and Trademark Office can help you get started with applying for a trademark.
A copyright, on the other hand, protects original works so that only the owner can display or sell that work. The following businesses might benefit from pursuing a copyright:
- Photography business that sells stock images.
- Blogger that writes about current events or business.
- Musician that sells albums or access to downloadable sound bites.
To register for a copyright, visit the US Copyright Office for instructions.
Get local assistance and join small business groups
Starting a business can be a daunting challenge, but you don’t have to go it alone. Utilizing local resources, such as grants or webinars on topics helpful for entrepreneurs, can give your business a competitive advantage in the form of financial resources or valuable knowledge. Additionally, consider connecting with other small business owners in your area — you can share insights about the customers in your community, run cross-business promotions, and strengthen your business’ ties to your area.
The table below provides links to resources for each state, but you should also look into small business resources that are specific to your county, city, or region.
Conclusion
Starting a new business is a thrilling experience, but amidst all the excitement, it’s important to remember the administrative tasks required to operate in your state. In this article, we’ve covered all the essential steps and provided state-specific resources to help you manage these tasks, from choosing your business structure to picking the perfect name to all the applications associated with running your business, paying taxes, and getting the required permits, insurances, and protections.
While it might seem daunting, you’re not alone — there are resources in your city, county, or state to support you, and many small business owners that you can network with and learn from.
Featured image: (©Sergey Nivens - stock.adobe.com)
