10 step complete guide for starting a consulting business from scratch.
Register Your Business
At some point, you will need to register your new business. The process of registering a business is different and depends on the type of business you’re starting, how big your business is, and what state you live in.
Here’s what you need to know about registering your new business.
Choose your business structure
Before you can register a business, you will need to decide on a business structure
As we emphasized in another part of this guide concerning business structures, there are many different types of legal structures for various business entities. For new business owners, choosing the best one for your business can feel overwhelming.
Don’t rush into making a decision. Instead, spend some time reading about each possible entity your business might fit into. Consider which structure is most helpful for your business, and how each structure can help you accomplish your professional and personal goals.
What are the 4 primary types of business structures?
There are 4 primary types of business structures:
- A sole proprietorship is the most basic business entity. A sole proprietorship means that one person is solely responsible for business profits and debts.
- A partnership is a shared responsibility between two or more people who both hold personal liability for a business.
- Limited Liability Company (LLC) is a structure that permits owners, partners or shareholders to limit personal liability, but still includes tax and flexibility benefits associated with a partnership.
- A corporation is an entity legally considered separate from its owners. That means that corporations are permitted to own property, can be held liable, must pay taxes, and may enter contracts.
Find a location for your business
Next, you need to decide on a location for your business. When you start thinking about a physical location, assess what you must have, what you’d like to have, what you won’t tolerate, and how much you want to pay.
You must know these things when you evaluate your location options.
We cover location in depth in another part of this guide concerning choosing a great business location.
Get and register your business name
You’ll next need to obtain a business name and register your new business. Read the guide on business names for a detailed look at naming your business.
Registering a business name involves registering your business entity (i.e. LLC, corporation, etc.) But if you’re starting a sole proprietorship or a partnership operating under a name that isn’t your own, you may need to file an assumed business name, also known as a DBA. See below for details.
Register a DBA if required in your state
Many sole proprietorships and general partnerships (as well as other business entities) still want to operate under a business name. To do so, they should file a DBA (Doing Business As) with their local state or county. Here are the DBA requirements in all 50 U.S. states and territories.
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Get your federal and state tax IDs
You may need to get an employer identification number (EIN) from the IRS.
If you’re a sole owner and don’t have employees, this is not required. But you might want to get an EIN anyway to keep your personal and business taxes separate and to be sure that you can quickly hire when the time comes to expand your business.
The IRS has a useful checklist to help you decide whether you will need an EIN to run your business. If you do need an EIN, you can register online for free.
You’ll need your EIN when you register with your state, so be sure you get the EIN first.
Register with state and local agencies
In addition to getting a federal tax ID, you’ll need to register your business with one or more agencies in your state or local government. If you will have employees, you may also need to register with your state agency to file payroll taxes.
Apply for licenses and permits
Make sure you have all required licenses and permits you need to begin serving customers. Each industry and each municipality may have different requirements. The U.S. Small Business Administration can help. They created an easy way to search for required permits and licenses by entering your location and type of business.
Get a registered agent
If your business is an LLC, corporation, partnership, or nonprofit corporation, you’ll need a registered agent in any state in which you do business, before you file.
A registered agent receives official papers and legal documents on behalf of your company. They forward these documents to you. The registered agent must be located in the state where you register. Registered agents are not expensive and most business owners prefer to use a registered agent service rather than perform this task on their own.
File for foreign qualification if doing business outside your state
If your LLC, corporation, partnership, or nonprofit corporation conducts business activities in more than one state, you might need file for foreign qualification in all states where your business is active.
You will register the business in one state, but most states require that in addition to that registration, you also qualify to do business in the state as a foreign entity.
Foreign qualified businesses typically pay taxes and annual report fees in both their state of legal formation and in all states where they’re qualified as a foreign entity.
To qualify as a foreign entity in any state, you typically must file a Certificate of Authority with the state. Many states also require a Certificate of Good Standing from the state where you business was legally registered. Each state charges a filing fee, but the amount varies by state and business structure so check with your state's business department for those details.
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