Are you currently bringing your dream business to life?
If so, congratulations! You’re about to embark on an entrepreneurial journey that many talk about but only a few actually put into action.
Getting your business organized and legally formed should be top of mind during these initial first steps. Even if you have been operating a business for a while, now is the time to officially register your business in your state.
Registering your business provides you invaluable benefits as an entrepreneur.
Those benefits include:
- Can provide protection against your personal assets if a suit is filed against you
- It is a requirement to open a business bank account
- Can qualify you for business funding (loans and credit)
- Can legally transfer ownership of your business
Now that you are aware of a few key benefits of registering your business in your state, let's share the two steps you need to execute next for business registration.
Determine your legal business structure
There are four primary business structures that are found in the United States. When you are formulating your business it is important to determine what business structure works best for your business goals, even at inception.
The four legal business structures include; sole proprietorship, partnership, limited liability company (LLC), and corporation.
A sole proprietorship is a one-person owned and operated business.
A partnership is an agreement to own a business between two entities.
An LLC is between one owner and another entity that serves as a way to avoid paying double taxes (both personal and business tax). With an LLC you just pay personal taxes.
A corporation is a group of people who are authorized to legally act as a single entity for a business.
Register your company with your state
After establishing your business entity it is now time to actually register your business with your state. Keep in mind that every state’s requirements may differ. The below guidelines are common guidelines found in most states.
Remember: before registering your business, please check with your home state’s specific guidelines.
Sole Proprietorship steps
In most states, no organizational documents are required. Getting a DBA (doing business as) certificate with your county’s local county clerk’s office for a small fee (often under $20) is recommended. This allows your state to have a record of your business being in existence. Sole proprietors are most common among freelancers, gig workers, and independent contractors.
In most states partnerships also don’t require organizational documents or registration. However, all partnerships should have a formal written agreement drafted between the two partners to identify roles and responsibilities, just in case the partnership dissolves in the future. Having a DBA for a partnership structure is also a sound idea.
With an LLC you will have to file a certificate of formation with the Secretary of State in your home state. The fee for doing so ranges from $99 to $300 depending on your state.
For a corporation, you will also need to file a certificate of formation with the Secretary of State in your home state. When you have a corporation you will also need to appoint a registered agent to your company. A registered agent must have an address in the state the business is located. They also serve as the point of contact for the state.
To incorporate your business the fee for doing so also ranges from $99 to $500 just as it does for an LLC.
Keep in mind that an annual fee is incurred for registered agents for corporations. The annual fees range from $150-$300 depending on your state.
Overall, the process of registering your business in your state is not as complicated as many entrepreneurs believe it is.
We hope that this quick overview and two steps will help you make the leap to register your business with your state so you can efficiently get your business off to a solid start.
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Starting a business takes strategy and sweat equity, but there’s no need to do it alone.