If you want to start a small business but are currently struggling with legalities, then worry no more. In this articlewe’ll discuss the requirements for how to Start A Small Business In USA. Registering your business is very important to ensure that it’s following all the legal requirements. Failing to do a proper registration of your business can result in legal and financial implications in the future so make sure that you have all the necessary information with you about How to Register a Small Business in the U.S.
Register a Small Business in the U.S.
Starting a Small Business In The USA can be an exciting venture. However, you need to jump through several legal hoops before you start your operations. These legalities are there to protect you, your business and your customers. So we’ll be discussing everything from the structure of your business to taxation requirements that you need to fulfil in order to start your next venture. As a responsible entrepreneur it is your duty to take care of all these legalities and run your business honestly.
Steps To Register A Small Business in USA
Now, we are going to discuss some of the basic requirements that you need to fulfil in order to start you business.
1. Business Structure
The very first state of business that you need to do is to select your business structure. The business structure helps in determining how your company will be managed, taxed and legally work. So let’s what are some of the of the most popular business structures:
- Sole proprietorship is great if you’re a solo businessman. In this type of business business and owner are the same as one entity.
- The Partnership entails shared business ownership between two or more parties. Partners are liable to business debts.
- Limited Liability Company (LLC) is a widely opted choice. Here you and business will be treated separately.
- If you want to start a big business then you should register it as a Corporation.
While deciding the business category you should take your time to avoid any future financial or legal implications. You should also take consultation from a legal or financial advisors for the same.
2. Pick a Name for Your Business
The name of the business is how people will remember and identify you. Your name is your business’s first impression. So while picking up a name you should take your time and ensure that it is a way to remember, reflects your brand and is legally available. This is how you can do so:
- Based on the service and the nature of your business, brainstorm different ideas that align with your business values and goals.
- Make sure that you check whether the name is available to take or not through a government business registry.
- You should go through the U.S. Patent and Trademark Office (USPTO) database to search for the availability of your business name.
- Find the suitable domain name that relates to your business.
3. Employer Identification Number
Once you have decided your name it’s time to start the legal proceedings. Get an EIN, or Employer Identification Number. It is a unique nine digit number given by Internal Revenue Services (IRS) to identify your business. Almost all businesses need an EIN number. Now the number is important if you want to do tasks such as open a banking account for your new business, get employees for business and file tax. Let’s have a look at how you can do so:
- First go to the official IRS website and complete the EIN online application.
- Make sure that you have finalized the structure of your business and its name before filling the application form.
- The process is completely free and in May cases you’ll receive your EIN instantly.
4. Apply for Business Licenses and Permits
Once you have your EIN number you can start applying for the business license and permits based on your business needs. Now license requirements can vary depending on the nature of business and type state in which you want to open. For example if you want to sell alcohol or firearms you need federal license and for other businesses you need local state licenses.
You can use the U.S. Small Business Administration (SBA) official site to find permits and licenses you require. Based on that you can file an application to concerned authorities and get your licenses and permits.
5. Register with State Agencies
In many states even though you’ve received your EIN number from the IRS and have your business registered, you still need to register your business separately with state authorities. Now this includes
- You’ll need to file the formation documents such as Articles of Organization (for LLCs) or Articles of Incorporation (for corporations) with the concerned state authorities.
- For different states and business structures there are different registration fees that you need to pay.
- If your business is in preview of taxes then you might need to register for state taxes.
6. Open a Business Bank Account
Once you’ve completed the formalities and registered your business legally, then you can open a separate business bank account. This is an important requirement that helps in maintaining clean and clear financial records and protects your personal assets. By opening separate bank account you get benefits like:
- A separate bank account helps you in bookkeeping and tax reporting.
- It also helps in increasing the trustworthiness of your venture.
- With a business bank account you get access to business credit lines and loans.
- In the event of audits and lawsuits the separate bank account provided the owner with legal protection.
7. Understand Compliance Requirements
To run a business you’ll need to follow the strict compliance requirements. This means you’ll have to make sure that your operations are in accordance with the different federal, state, and local regulations. Let’s see some of the the taxes you need to take care of:
- Tax Filings
- Annual Reports
- Employment Laws
- Record Keeping
8. Understand Your Tax Obligations
For the financial health and good business practices of your business you should understand your tax liabilities. You might need to pay different types of taxes depending on the nature, structure and the location of your business. Also get a certified public accountant (CPA) to manage all your tax liabilities. So let’s have a look at it:
- Income Tax is to be paid by businesses in their profits to federal agencies and sometimes states too.
- If you’re in a proprietorship or partnership then you’ll have to pay Self-Employment Tax.
- If you have employees in business then you’ll need to take care of paying the payroll taxes.
- If the goods and services that you sell comes under the purview of tax then you need to pay Sales Tax.
- Some industries also need to pay Excise Tax.
To Register A Small Business In The USA you should plan well and think thoroughly. You should pay attention to detail and have a clear picture of what you want. We have enumerated the basic steps on how to start a small business.
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