Anyone is free to start a business today. The person just has to offer a legitimate product or service that another person will pay for. However, it is necessary to register a business with the appropriate authorities before launching it. This way, you won’t face any legal headaches affecting your enterprise in the short or long term.
Do I Need to Register My Business?
You can run a firm without registering it, but it is advisable to incorporate it before you start. Incorporated firms are official in the eyes of the government and the legal system. It will make it easier for you to transact with other businesses and settle disputes within the legal system. It also ensures that your personal and business assets are separate, and you won’t be personally liable for debts or other claims incurred by the firm.
Steps to Register a Business
It isn’t complicated to register a business. The steps to take include:
- Choose a Name
The name of your enterprise is the first thing that differentiates it from the competitors. Coming up with a name can be tricky, but there are some tips to note:
- For one, choose a name that is short and memorable;
- Ensure the name is relevant to your target market and something you can build marketing buzz around;
- Don’t use a name already taken by a popular business to avoid confusion and potential lawsuits.
- Choose a Legal Structure
There are various legal structures in which you can create an incorporated entity. You can incorporate it as a partnership, corporation or LLC.
LLC stands for Limited Liability Corporation. With this structure, you won’t be personally liable for any debts accrued by your company. This means that your personal assets can’t be targeted by creditors if anything happens to your company.
You can register your enterprise as an “S” or a “C” corporation. An S corporation allows “pass-through taxation,” as in, you will pay income tax on revenue that the enterprise generates but not for the actual business. In contrast, a C corp is considered a separate entity in taxation. So, you will be taxed on both your business profits and personal income.
A partnership is when two or more persons form an enterprise agree to share profits, losses, management and other responsibilities of the enterprise. The partners are personally liable for the company’s obligations and must pay taxes on any profit they take from it.
- Choose a State of Domicile
The state where you register your firm is known as the state of domicile. It is not a must to incorporate in the state where you are located. However, incorporating it in another state adds complexity to the process.
After making a choice, you will have to file incorporation papers with the appointed Secretary of that state or someone in an equivalent position.
- Appoint a Registered Agent
It is compulsory to provide a registered agent address to which legal documents and official notices for your firm will be delivered. You can use your own address or pay for a professional registered agent service.
- Register for Taxes
You need to register for taxes in your state and get a unique tax number. This number lets you file tax forms with the state or federal government. After doing this, you are good to go, and you can open a bank account to transact with customers
How Much Does It Cost to Register a Business?
Registering a business incurs little or no cost in most countries. The main cost comes from taxes that you will have to pay on profits that the enterprise generates.
How to Go about Registering a Company in 2023
Here are the steps summarized:
- Choose a name;
- Choose a legal structure;
- Choose a state of domicile and file registration papers;
- Appoint a registered agent;
- Register for taxes;
- Open a bank account to transact with customers or other firms.
Businesses make up the foundation of the global economy, and anyone is free to start their own. But, it’s important to register your firm because it’ll make it easier to transact with customers and protect you from personal liability for debt incurred by the enterprise. We’ve explained the steps to follow if you want to register a firm.