As an entrepreneur, it’s easy to get caught up in the thrill of innovation, product development, and marketing — but none of these can happen without the foundational step of business registration.
In this guide, we’ll cover how to register a business, why it’s important, and what advantages it offers.
Why Do You Need To Register Your Business?
Understanding how to register a business is essential for overall business compliance. Operating a new business without proper registration is not only frowned upon, but can be illegal in many jurisdictions — small businesses especially can face non-compliance penalties (such as hefty fines).
That said though, legal compliance is only one of several reasons registration is essential. Let’s look at a few others:
Identity Protection
Every brand, especially startups, desires to carve out its niche in the market. Choosing and safeguarding your business name is pivotal to brand differentiation.
Registering ensures that your trade name or fictitious business name (often referred to as doing business as or DBA) is protected, preventing others from legally using the same name. This not only elevates brand recognition but also fosters trust among stakeholders and clients.
Professionalism
When entrepreneurs approach institutions like the U.S. Small Business Administration with a solid business plan, having a registered business shows professionalism and credibility. This standing is often key in attracting customers and establishing business relationships and partnerships.
Liability Protection
Every business structure, whether a sole proprietorship, limited liability company, or limited liability partnership, offers different levels of liability protection. Registering your business can shield personal assets, helping ensure that in the face of legal disputes or debts, assets remain untouched.
Ease of Doing Business
Registering with the secretary of state or relevant state agencies also facilitates smooth operations for any type of business. Many institutions prioritize interacting only with registered entities to reduce liability and increase trust among their stakeholders.
Whether you need to open a business bank account, secure financing, or even file annual reports, registration is the first step for business legitimacy in any of these processes.
Tax Requirements
Adhering to business tax protocols, understanding state taxes, and working in alignment with the IRS and Franchise Tax Board is foundational for running your business well, and business registration helps facilitate your tax obligations.
Asset Protection
From maintaining your inventory to securing a trademark with the trademark office, registering your business draws a clear line between personal and business assets.
Long-Term Continuity
Visionary entrepreneurs and business entities often look ahead. By filing the right articles of organization or articles of incorporation, business owners ensure a robust foundation for future growth.
Registration is the gateway through which your business gains legitimacy. It’s not just about adhering to the law — it’s about carving a niche, projecting credibility, and setting the stage for sustained growth.
How Much Does It Cost To Register a Business?
So, now you know the basics… but how much does it actually cost to register a business?
The answer, while seemingly straightforward, is layered. To answer this, you need to understand the two main steps in legally setting up a business.
Formation or Incorporation
Formation or incorporation is the act of creating your business as a legal entity. You can only form or incorporate your business once and in one state, and the choice of state often revolves around various factors, like tax implications and the nature of your business.
The fees for this process can range considerably, with states like Delaware being popular for certain business types due to its favorable corporate laws. This formation fee typically involves filing articles of incorporation (for corporations) or articles of organization (for LLCs) with the chosen state’s secretary of state.
Registration
Once you’ve formed or incorporated your business in one state, you can register your business in any other state where you plan to conduct business activities. This is essential for businesses that operate across multiple states.
Registering in multiple states ensures that you operate within each state’s regulations. For example, each state has its own registration fees, which you typically pay to the secretary of state. This cost can vary based on the state and the type of business entity you’re registering.
Considering the diversity across states, here’s a general overview of registration and filing fees:
Formation or incorporation fees: These can range from $50 to $500 or more, depending on the state. For instance, the cost to incorporate in Delaware might differ from that in California.
Registration fees: When registering your business in other states, expect to pay anywhere from $50 to $400 or more per state, again depending on the state and your business entity type. In most cases, you’ll pay less than $300.
Additional costs: Apart from the basic fees, there might be additional costs for obtaining specific licenses or permits or for obtaining a registered agent in states where you don’t have a physical presence.
Recurring fees: Some states require businesses to file annual or biennial reports, which come with their own set of fees. Staying updated on these is crucial to maintain good standing with the state.
Regardless of the costs of forming and registering a business from one state to the next, it’s an essential investment in ensuring the legitimacy and smooth operation of your business.
If you’re planning to conduct business in more than one state, compliance can seem complex — and that’s where Mosey comes in. Mosey keeps all of your compliance needs in one organized platform so you can stay compliant no matter where your business takes you.
How Do You Register a Business?
Starting a new business can be exciting, but it’s essential to make sure your business is on solid legal ground from the get-go. Registering your business is a critical step toward establishing your company’s legitimacy, protecting your brand, and complying with tax and legal obligations.
Here are the steps you need to take:
1. Decide Which Business Structure Works Best
The type of business entity you choose — whether it’s a sole proprietorship, limited liability company (LLC), corporation, or partnership — affects your liability, paperwork, and how you report income. “Not only is it important to decide which business structure best fits your operating procedures, but you also need to decide which business structure gives your business the best tax benefits for you and potentially your partners,” notes Taylor Fike, Partner at Fike Advisors and Expert Contributor for Mosey.
It’s important to choose a structure that aligns with your business goals and offers the best financial and legal advantages.
2. Choose a Legal Business Name and DBA
Your business name is the cornerstone of your brand identity. When selecting a legal business name, ensure it aligns with your brand and is unique enough to help you stand out from competitors in your industry.
Remember, you can always opt for a DBA if you wish to operate under a name different from your legal name. While a DBA isn’t a requirement, it offers flexibility in branding without the need to form a new business entity.
3. File Tax Information and Documents
You may have to file several tax documents depending on where your business operates:
- Local tax compliance: Some local governments enforce their own business tax requirements, which may vary even for cities within the same state.
- State tax compliance: Each state has its own requirements for sales tax, employment tax, and more.
- Federal tax compliance: At the federal level, businesses typically need to obtain an employer identification number (EIN) from the IRS. Think of the EIN as a Social Security number for your business, essential to hiring employees and opening a business bank account.
4. Register Business With the Secretary of State Office
Once you’ve determined your business structure and name, register with the Secretary of State in the state where your business will be headquartered.
This step legitimizes your business, allowing you to conduct business legally within that state. If you plan to operate in multiple states, you may need to register in each state separately.
5. Secure Necessary Permits and Licenses
Depending on what your business does and where it’s based, you may need certain permits or licenses to run it legally. This could be a general business license or more specific ones like health or safety permits.
It’s important to obtain these before you start doing business to steer clear of any legal issues.
6. Make Sure You Comply With Additional State Requirements
Some states have unique requirements that go beyond basic registration — these can include publishing a notice of your business formation in a local newspaper or filing an initial report. Staying informed and ensuring state compliance protects your business from unnecessary penalties or fines. Mosey can help in areas such as payroll, HR, tax, and registration compliance across all states, plus DC, and many major localities.
As you build your business, forethought and preparation can make all the difference. By carefully following each step of the registration process, you ensure that your business is set on a trajectory of success. Fike notes that “Help from a compliance company like Mosey can give you an advantage and protect you from future legal difficulties that might arise in the future.”
Maintain Compliance After Business Registration
Even after your business is registered, the journey of compliance continues, especially if you’re operating across multiple states. With shifting regulations and state-specific requirements, it can be overwhelming to track each law you need to follow.
That’s where a compliance platform like Mosey can help. We specialize in guiding businesses through the intricate landscape of multi-state laws, ensuring you remain updated and ahead of any changes for HR, tax, payroll, and registration compliance.
Our platform streamlines your compliance processes, offering timely alerts, expert insights, and a user-friendly dashboard tailored to your needs. Try a demo today to see how Mosey can shoulder the complexities so you can focus on what you do best.
