Registering a business and other admin tasks
After all the excitement of deciding to start a business, you’ll have some paperwork to do. These first tasks as a business owner won’t be the most fun, but they’ll help keep you out of trouble with the law.
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.
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.
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.
Where to get help
If you’re unsure of your obligations to the government, there are people who can help. Look for industry associations for your type of business, search around for a Chamber of Commerce and other local business advocacy groups, find businesses like yours and ask the owners what regulations they have to comply with, or simply speak to a local accountant.