How To Register A Business

Business registration is a necessity for most, but not all, small businesses. Not sure how to register a business, what you should expect to pay for business registration costs, or if you even need to register your business?

Read our guide to learn what you need to legally register your small business, the steps to register a new business name, and how much business registration costs.

Do I Need To Register My Small Business?

Registration legitimizes your business as a legal entity in the eyes of your local, state, and federal government. Registration also offers certain protections for a business — for example, when you register your business’s name, other businesses in your state are prevented from using that same name.

Not all businesses need to register at a state or federal level, however. If you have a sole proprietorship operating under your legal name and with no employees, you don’t need to register as a business entity with your state or for an EIN.

How Much Does It Cost To Register A Business?

The cost to register a business varies greatly from state to state. Typically, registering to obtain a business operating license from your state will cost at least $50 or $100 but less than $500. You’ll also need to pay a local license or tax certificate fee to operate a business in your city or county, which also varies but might cost about $35.

Registering a business with the IRS is free.

In most states, it will cost at least $50 to register as an LLC, the most common business type. You will also pay an annual LLC fee each year in most states. For example, it costs $200 to register an LLC in New York state, plus a $9 annual LLC fee.

It’s generally cheaper to register as a DBA — which is “Doing Business As” — and that costs about $25 in most states.

States and the federal government may require additional business license fees for certain industries. For example, you may pay several thousand dollars to obtain a liquor license from your state.

As for local business registration in your city or county, this will likely add another $25 to $50. For example, applying for a local business tax license in San Diego, California, is $34.

How To Register A Business In 5 Easy Steps

The general steps all aspiring business owners will need to follow to register a new business are as follows:

1) Decide On A Business Structure

If you haven’t already decided on a legal structure for your business, now’s the time to do it.

If you have a small, one-person operation or run your business with your spouse, you may choose to register as a sole proprietorship. Other popular business structure options include a limited liability company (LLC) or corporation (C-Corp).

It may help you to know that most small businesses are sole proprietorships. With a sole proprietorship, you may run your business under your legal name or under a different name or DBA (“doing business as”) if you wish to separate your personal and business identities.

Check out our guide to types of business structures to learn more. Be sure to read up on each type’s pros and cons before deciding which structure works best for your business.

2) Register Your Business Name

The way you register your business name will be slightly different, depending on the type of business structure you are using.

• Sole Proprietors: If you are using a DBA (company name other than your legal name), you will likely need to register your business name with your state or county by filing a DBA, also sometimes called a fictitious business name registration. Registering your business name prevents anyone else from using it and is also required in most states. Usually, you should be able to file a DBA with your state or county clerk’s office. Before filing, you’ll also need to make sure no one else is using your chosen business name.
• LLCs & Corporations: When you set up an LLC or corporation, you will register your business name with the state at the same time. Again, the rules and processes vary from state to state, so you will need to check with your state to find out how to register a business as an LLC or corporation at the state level.

Optionally, you may also wish to register to trademark your business name, which protects the name of your business and its goods/services nationally. Check with the US Patent and Trademark Office if you want to register a trademark for your business name or logo.

3) Register Your Business With The IRS

Next, it’s time to register your business with the IRS to get your Employer Identification Number. An EIN is like a Social Security number for your business that identifies your business to the IRS for tax purposes.

If you do not have any employees, registering with the IRS is optional, and you can use your Social Security number to file taxes instead. Aside from sole proprietorships and single-owner LLCs with no employees, most other businesses will need to register with the IRS and get an EIN.

4) Register For Business Licenses & Permits

The local business licenses and permits you need vary depending on your location. For example, in the city where I live, all businesses are required to file for a “Business Tax Certificate,” which registers you to pay local business taxes.

Depending on your industry, you may also need to apply for state-issued business permits. Plumbers, dry cleaners, restaurants, and various other business types have state-regulated permits they must apply for. For example, if you plan to open your own catering business, you will need a state health permit.

Federal business licenses are also required for certain industries. For example, if you are opening a bar, you will need a federal permit to sell alcohol.

5. Register With Your State’s Revenue Office

If you live in a state where you are required to charge sales tax, you will need to apply for a sales tax permit, also called a sales tax ID or license. This applies to almost all businesses that sell tangible goods — even if you only sell online.

Typically, you apply for a sales tax permit through your state’s Department of Revenue. Your state may ask for your EIN during the tax registration process, so make sure you register with the IRS before applying for your local tax ID. You may also need to supply your business license and business bank account.

Certain types of businesses may not be subject to sales tax; make sure you know the rules and regulations in your state before you assume that you don’t need to charge sales tax.

Other Important Things You Need To Start A Business

Final Thoughts On How To Register A Business

Almost all businesses are subject to some registration requirements, such as registering your business name with your state, registering for your federal tax ID, and registering with your state tax board. Realtors, bar owners, mechanic shops, and other specialized businesses will require additional permits and licenses.

Yes, business registration can be a small hassle, but when you look up how to register a business in your state and city, you’ll find that it’s pretty easy and straightforward in most cases.

Need more info about the different types of business licenses you might need? Learn more about how to get a business license.