#5 Registering Your Business With Federal, State And Local Governments…

Now it’s time to register your business. The process of registering a business is different depending on the type of operation you’re starting, how big it is, and what state you live in. Many states, cities, and counties require a business license and/or impose an occupational tax or other type of tax on individuals and firms conducting business within their jurisdiction. You need to register your business with the IRS to receive your Employer Identification number (EIN). Your EIN is like a social security number for your business and is necessary for filing your taxes.

Articles Of Incorporation

One of the key requirements of starting a new corporation is filing for Articles of Incorporation. These important documents are required for business owners in all 50 states. And in order for your corporation to start conducting business, these documents need to be submitted and approved by the Secretary of State before your business formation can be considered complete. LLCs will need to create an operating agreement. Sole proprietorships and partnerships are considered established as soon as the owners conduct business.

DBA (Doing Business As)

The purpose of registering a DBA name is to notify the public that a particular person or business entity is conducting business under a name other than its legal name. Assumed name (DBA) laws are consumer protection laws. Normally when you register an LLC, a partnership or a proprietorship you also register your company name eliminating the need for a DBA. However, in some instances, you may use a DBA for your LLC to expand your business later and operate part of it under a name other than your original business name. If you are in a general partnership or a proprietorship operation under another name, you may need to apply for a DBA certificate. Generally, there is a registration fee involved.

IRA Tax ID EIN (Employer Identification Number)

Corporation and LLCs need to apply for EIN numbers. EIN’s are not required for sole proprietorships with no employees; however, you may want to apply for one anyway to keep your personal and business taxes separate. If you need an EIN, you can register online for free. Generally speaking, having an EIN helps you separate your personal finances and personal life from your business. And that’s important to simplify accounting and bookkeeping, and to limit liability in the case of a lawsuit. Often, foregoing an EIN now can cost you time and money down the line.

Income Tax Forms

What it is: Form 1120, also referred to as the U.S. Corporation Income Tax Return, reports corporate income or losses. If your business is classified as a regular corporation, you are required to file Form 1120 each year. If the only member of the LLC is an individual, the LLC income and expenses are reported on Form 1040, Schedule C, E, or F. If the only member of the LLC is a corporation, the LLC income and expenses are reported on the corporation’s return, usually Form 1120. A sole proprietorship must report income or loss from a business operation or a profession you practiced as a sole proprietor. Use Schedule C to report wages and expenses you had as a statutory employee. With a Schedule F (1040 or 1040-SR), your business is not taxed separately, so it’s easy to fulfill the tax reporting.

Sometimes it is best to hire a consultant who thoroughly understands your offering, market, and target audience to bring your company a major competitive edge by setting you on the right path from the get-go. They are familiar with all the state, federal, and city taxes and can make sure you are never surprised with a tax penalty.

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