Facts on How to Register a Business Name
As a new small business owner, knowing what steps to take to register a business name with the right county, local or federal agencies, can be quite a confusing process. There just seems to be so many things that you need to take into consideration. For instance…
- What are the legal requirements?
- How should I structure my business?
- What paperwork should I complete?
- Do I need a Tax ID Number?
If you have ever spent time trying to read and understand legal and regulatory requirements, you know that this can easily become a nightmare for a small business owner.
As with any businesses, small or large, staying informed is really the key to the registration process and in the legal operation of a business. By following some basics about how to register a business name you can be well on your way to removing some of the mystery around small business regulations and requirements.
Listed below is some basic information about small business registrations. Here are the general areas that you need to know about:
- Registering a “Doing Business As” Name
- Business Incorporation Process
- When Do You Need Licenses and Permits.
- Obtaining a Federal (EIN) or State Tax ID
How to Register a “Doing Business As” Name
Here is a little known fact: Whether your business is brand new or you have been in existence for years, if you want to name your business something other than your name, you are required to register it as a “Doing Business As” name (AKA DBA).
Other names that this is known by are trade name, or assumed name. If you do not want register your business name, it is suggested that the legal name of your new business be listed as your name or the name of the person that registers the business.
Here is an example of how this works… Let’s say my name is John Brown and I run a Handy Man Business. If I choose not to register my business, my legal business name would be “John Brown Handy Man”. But I f I wanted to use the name “Super Dependable Handy man services”, I would be required to register with the appropriate local agencies.
The best place to contact to find out whether if you need to resister your business, is your local or village authorities. Then from there I would move on to your state office and eventually the federal authorities.
Note: Not all of these offices will require you to register a business name, but it doesn’t hurt to be better safe than sorry. As a general rule, a DBA will be needed in the following cases:
- Sole Proprietors or Partnerships – If you start a new business under any name other than your real name, you need to register as a DBA.
- Existing Corporations or LLC’s – If your business is already set up and you are incorporated or as an LLC, but want to change your business name, you need to register it as a DBA.
Note: Please keep in mind that a DBA is not the same as a trademark, meaning it will not protect your business name from being copied. For name protection, consult the U.S. Patent and Trademark Office for more information.
Incorporating your business is another option that a business owner can explore. There are four (4) choices a business can choose from including Sole Proprietorship (AKA DBA name). The other three are: Regular corporation, S corporation and LLC also known as Limited Liability Company. For more on the types company or business entities available, visit: USA Corporate Services
From a legal perspective, you are not required to Incorporate. According to the statistics, more than 70 percent of businesses in the United States operate without incorporating.
If you decide that incorporating is the solution for your business, I encourage you to consult an attorney. There are some pay websites such as Legal Zoom, that can also help you with incorporating a business.
Licenses and Permits
Sometimes business owners will skip registering for the proper licenses or permits, sighting that it is too much of a hassle or hoping that no one ever checks up on them.
Often times these permits are a must and the costs associated with obtaining them are small compared to the fines that can sometimes be levied if you are caught operating your business without them.
This is usually not an option and is normally required for virtually all businesses, even home-based or Internet businesses. If you are unsure what is required, I urge you to take the time to contact the appropriate agencies.
Register with the IRS and Tax Authorities
One way that companies sometimes get themselves in trouble, is by failing to comply with the tax requirements. Whether it is sales taxes at the state level or business income taxes at the federal level, failing to acquire the tax ID numbers will bring the state revenue department or even worse, the IRS to your door step.
Here are a couple of tips concerning registering with the right authorities:
- Federal Tax ID – Also referred to as a Employer ID Number (EIN), it’s like having a social security number for your business. A federal tax ID can easily be obtained by applying for one on the IRS website and completing the EIN form (Employer Identification Number). A Federal Tax ID is necessary if your business is a partnership, corporation or any other type of organization that has employees that you pay wages to. Apply for an Employer Identification Number (EIN) Online Now!
- State Tax ID’s and Permits – A State tax ID is a unique tax identification number that businesses are required to have if they to do business in any state that collects personal income taxes. The state ID number is usually required, even if your business does not have any employees. Moreover, if you plan to sell retail items, check with the state authorities to see if you need to get a sales tax permit.
Side Note – Small Business Certifications: This article was about how to register your small business, however getting a certification that officially says that you operate a small business (Small Business Certification) may be a good idea, especially if you plan on doing business with the U.S. government. Why? Often, the U.S. government will set aside contracts for small businesses. In order to to qualify for these contracts, you must have a certification that states that you are indeed a small business according to SBA sizing standards.
More on Small Business Registration