Under certain circumstances, it’s possible to conduct business as a sole proprietor without registering your business. However, choosing to incorporate and register your business inspires more confidence in your customers and offers protections that a sole proprietorship doesn’t. If you're still in the planning stage with your business checkout our how to start a business guide to help you get off the ground.
While it may sound daunting, registering your business entity is simpler than you may think. Read on to learn how to register a business with state and local agencies.
How to register your business
Whether you’re registering your business as a sole proprietorship or a different business structure, registering your new business is a fairly straightforward process. Nevertheless, it’s important to register your business properly in order to avoid complications down the road.
1. Pick your business name
It probably goes without saying that your online store needs a name, and choosing a legal name for your business that’s both available and on brand can be challenging. When brainstorming your business name, it’s best to cast a wide net at first, then hone in on your top ideas. (Need some help coming up with ideas? Consult Shopify’s business name generator).
Once you’ve nailed down a few favorites, you’ll need to check if they’re available. Conduct a search in your local jurisdiction’s business database to see if any other businesses have registered under a similar name.
Other important considerations when choosing your business name include:
- Social media. Are relevant social media handles available, or is someone else already using your chosen name?
- Domain name. Conduct a quick domain name search to see if your branded URL is available.
2. Register your business
The step of actually registering your business involves two key components:
- Choosing your business structure and incorporating as such. Popular business structures include limited liability company (LLC), corporation (including C corp and S corp), general partnership, and limited liability partnership (LLP). For more on the most common business structures, read our guide, The 4 Most Popular Types of Businesses and How To Choose One.
- Getting your employer identification number (EIN). Regardless of business structure, an employer identification number (also known as a tax ID number) is critical. It protects your Social Security number (SSN) and establishes your business as a separate legal entity. This means your business can build credit.
Each business structure requires a different process for registration. Sole proprietors, for example, don’t need to do anything. Corporations, on the other hand, need to file articles of incorporation or similar corporate documents. Opting for an LLC? See our state specific guides for California LLC, Texas LLC, and Florida LLC.
3. Check requirements for each business location
Just as each business structure has its own registration process and requirements, each location has its own parameters as well. It’s important to check with federal, state, and local government agencies to find out what you need to legally register your business.
Additional steps may include permitting requirements, licenses, articles of incorporation, forms, and fees, among other things.
4. Register for taxes
In most places, businesses have to pay sales tax and potentially other applicable taxes or fees. Because sales tax varies by state, you’ll need to register in each state where you plan to sell.
Some states don’t collect sales tax, which means store owners do not have to register a business for tax purposes. These states include:
- New Hampshire
For the remaining states, check with them directly to find out what the process entails.
Get started: Shopify uses default tax settings for your online store, but you can customize your sales tax settings in your admin dashboard.
5. File for any trademarks
If you’re launching a brand or product with a unique name, logo, feature, or slogan, you may qualify for trademark protection. A trademark is “anything that’s considered a source identifier,” helping consumers recognize your brand or products.
While you can establish a trademark “unofficially” by doing business and establishing a reputation, the safer approach is to register with the corresponding trademark office, either on your own or with the help of a trademark attorney. This ensures that your trademark is protected from any other businesses that might seek to use your idea for their own benefit. At minimum, be sure to trademark your business name with both the state and federal government.
Tips for registering your business
As you proceed through the process to register a business, here a few things to keep in mind.
Before you start filling out any application, create a list of what you need. This will include things like your basic personal and business information, EIN, forms, licenses, permits, fees, etc. Have this information handy so you can fly through the application process.
For more complex business registration (e.g., for heavily regulated industries), you may want to enlist the help of an expert. Qualified tax professionals and business attorneys can guide you through the process, answering questions along the way and even taking care of some of the steps for you. Shopify Experts offers a directory of tax professionals who can provide assistance with US state sales tax and liability.
Stay up to date
It’s always best to check directly with official location- and industry-specific sources for the latest information regarding business registration requirements. Make it a habit to check on your licenses, permits, and registrations each year—for accountability and to help you remember, you might do it at tax time. Set up calendar reminders for any expirations or renewals as well.
Set up your business bank accounts
While not a required step for business registration, it’s a good idea to set up dedicated business bank accounts. Separating your business and personal bank accounts protects your personal assets; simplifies bookkeeping, tax time, and audits; and builds credit history for your business.
Learn more: Basics of Small Business Accounting: 12 Steps to Get Your Company on Track
To set up your business bank accounts, you’ll need to first choose a bank that suits your needs. The process to open bank accounts and any lines of credit is much the same as it is for personal banking. You’ll need your tax ID number and other basic business information when you fill out the necessary applications. Some banks require you do this in person, while others facilitate the process online.
Set up payroll
Once you’ve hired employees, you’ll also need to set up your payroll process. When you do payroll, you need to properly withhold taxes and maintain clear records in the process. Luckily, many business accounting software have payroll functionality built in, making this process a lot easier. But it still requires you set it up—and you have to ensure the sales tax is properly configured. You may also need to acquire an advance or loan to ensure employees are paid a proper salary. Check with your local tax office or hire a vetted expert for guidance.
Kickstart your business with Shopify
Now that you know how to register a business, you can begin thinking about how to run it. Shopify offers tools and integrations that make it easy to manage every aspect of your business. With thousands of third-party apps and integrations to choose from, you can build a virtual business command center.
DISCLAIMER: These guides are for informational purposes only and do not constitute professional legal or tax advice. Please consult independent legal advice and your own tax adviser for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.