How to register a business with the government
There are a few reasons why you might need to register your business with government bodies:
- Business licenses and permits: Your city, county or state may require you to get a license if you have a physical location, sell taxable goods or services, or serve food and beverages. Certain service providers must also get a license. Your local chamber of commerce should be able to tell you what you need. If you’re in a rural area, then your local librarian can point you in the right direction.
- Income tax: Sole proprietors don’t have to do anything with the IRS until tax time, unless they hire someone. All other types of businesses are expected to at least apply for a federal tax identification number when they start out. Corporations have the most to do. The IRS has a handy guide for all types of businesses.
- Sales tax: Most goods and some services carry a sales tax. You’re expected to add that tax to your price and collect the money for the government. Sales taxes are managed by state governments. Search for your local state tax agency to find out your obligations. Online businesses used not to have to worry about sales tax but it’s becoming more common for them to have to collect it. The sales tax rate changes depending on the state where your customer resides.
- Retail licenses and manufacturing permits: If customers physically come to your business, you may need a retail license. If you make things, you could need manufacturing permits. This can be a catch for home-based businesses as local zoning laws sometimes don’t allow certain business activities in residential areas. To check on the sorts of licenses and permits required by your local government, talk to the local chamber of commerce (or librarian).
If you’re going to employ people, ask the IRS for an employer identification number (EIN).
Extra steps to set up an LLC or LLP
If you’re setting up as an LLC or LLP, you’ll also need to register as a legal entity. This is handled by authorities in the state where your business is based. As part of the process, you’ll also need to file documents identifying key decision makers in your business, and outlining some of your internal processes. In most states, you’re also required to register a business name.
Registering a business name
Most states require companies and corporations to register a business name. The same applies to sole proprietorships or partnerships that trade under a name other than that of the owner/s. This is called a doing-business-as (DBA) registration, and the SBA (Small Business Administration) website is the best place to get started.
Getting a trademark
You can also legally protect your business name and logo to prevent others from mimicking your identity. This is different from a DBA registration and can be a valuable step for businesses that plan to invest a lot in making their brand widely known.
This area of the law can get complicated – especially if you expand into overseas markets and find there’s a business there with a similar name. Ask for advice from a legal professional with experience in this area.
At the very least, use trademark registries (and search engines) to check that no one already has your business name. It’s an easy way to save yourself a lot of hassle.
Disclaimer: Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the provided content.
How to start a business
Thousands of new businesses open every day. If all those people can do it, why not you? Here’s what to do, and when.
- How to do market research
Your business idea is clearly inspired. But it helps to check you’re not the only one who thinks so.
- How to write a business plan
Writing a business plan will help nail down your idea and give you a blueprint for executing it.
- Budgeting and forecasting
It’s time to run some numbers on your business idea. Budgeting and forecasting help with that.
- Pricing strategies and cost of goods sold
Your prices can influence the number of sales you make and the profit you earn on each transaction.
- Types of business structure
Your business structure can affect how much tax you pay, and how you're treated by the law.
- Small business accounting
If you’re starting a business, then you’ll need to get familiar with some accounting basics.
- Registering a business and other admin tasks
After all the excitement of deciding to start a business, you’ll have some paperwork to do.
- How to create a business website
Treat your website like an online version of a storefront. It’s the first impression for many customers and prospects.
- Tools and guides for your business
Now that you’re in business, you want to stay there. Xero’s got resources and solutions to help.
Download the guide to starting a business
Learn how to start a business, from ideation to launch. Fill out the form to receive this guide as a PDF.