Currently, 28 million small businesses are in operation in the US, and many new are coming up, still the country is open for the new budding entrepreneurs who want to make their mark in the industry. Starting a business in the US is not a big thing, yet the process could be complicated and might discourage you.
Here we are providing you some tips that could help you in fulfilling the registration requirements to start your business.
1. Make a choice of business structure that suits your need
Usually, a small business runs under 4 categories. Analyze the pros and cons of all the types and select the one that helps you to meet your goals.
- Sole trader: A person running its business alone, one who is responsible for all the legal aspects of the business
- Company or C-Corp.: A legal organization that operates separately from its shareholders
- Partnership or S-Corp.: A group of individuals organizing a business together, but not as a company
- Trust or Non-Profit Organization: An organization that runs to provide benefit to the society
Compare the types keeping in mind a few primary points like tax saving, limited liability, your control over the business, cost, and volume of the paperwork involved, and then make your choice.
Usually, there is no need to register a company established as a sole proprietorship, if it runs under the legal name of the owner. However, certification can provide specific benefits like credibility, liability protection, tax benefits and many more.
2. Select the name under which you want to run your business
After finalizing the business structure, think of the name under which you want to operate your business. A business name is all about your company’s image. You will be recognized in the market by your brand name. So be very cautious while selecting a title for your business.
Here are a few points to be followed while naming a company in the US.
- It should not match or be similar to your competitor’s business
- Add “Corp.”, “Inc.” or “LLC” after the name, depending on its business structure
- Go through the list of names that are not allowed to be used, e.g., use of the word “bank” is prohibited until your business is not a financial body
- Find the name using guidelines stated on the website of the state agency
- Pick a name that can be easily spelled and pronounced
3. Fulfil all the requirements to file Article of Incorporation
Filing the Article of Incorporation is the most crucial step for company registration. The document is called Article of Organization in case of an LLC. Before commencing this step, complete all the necessary documentation like:
- Mention the purpose of your business
- Select a registered agent in the state of incorporation. This is essential in case your business state is different from your home state. Provide all the necessary details of the registered agent to the state
- Give an outline of the of stock you wish to authorize
- Provide the name and address of the initial director of your company who is managing all the company’s affairs
4. Obtain an Employer Identification Number
Employer Identification Number (EIN) is needed for tax administration. It’s a tax identification number and is also required to open a bank account.
- Getting it is a simple process. You can easily apply for it online at the Internal Revenue Service (IRS) website
- Once you check into the site, a form displays on the screen. You have to answer all the questions mentioned
- On complete validation, you will receive your EIN in your mail
5. Open your business bank account
Opening a business bank account is helpful in managing the inflow and outflow of the finances. It is required to provide salary to employees. To open a bank account, you have to carry fewer documents:
- A bank demands your identity and the identity of your partners who have a partnership of more than 10% in the business
- If you are operating your business other than your legal name or if the name of your incorporation differs from the one under which it works, then you have to submit proper documents of your Doing Business As (DBA)
- The essential requirement to open an account under the name of your business is to provide details of EIN or tax identification number
- Present the certified Article of Incorporation
Follow these tips and explore some more to have a great beginning. It will help you to cover your business voyage with fewer barriers on the way.