Small Business Association: Help registering your new business

Opening any legal business entity these days, large or small, requires a lot of paperwork. Even if you’re just interested in expanding what you already have, you’ll need to seek licenses, business permits, registrations, and much more to become a legally operating business. The Small Business Association has laid out five steps to help entrepreneurs get off the ground and operate legally. Crossing all the t’s and dotting the i’s are an important first step in learning the rules of operating and competing in the small business world.

1) What type of small business structure will function as your small business?

Sole Proprietorship – This business structure is run under a single owner who pays income taxes on business profits as if it were personal income. It is the simplest business to run, yet you bear all the risk.

Company: This business structure is executed with two or more natural persons who own a company. They not only share equally the risk but also the rewards of the business.

Corporation: This business structure is the most common to companies. A business is formed under the laws of the state and is a separate entity from the owners. This is beneficial because the risk is shared and limited to the assets of the company and not those of the individual owners. The business has a legal existence above and beyond the owners.

S Corporation – This business structure is similar to a corporation, but allows for certain tax benefits and allows business profits and losses to pass through to shareholders. There are certain rules that must be followed with S corporations, so take a look at them before you start setting up this type of business.

2) Trade name registration

To legally run your business under something other than your name, you must register the business name with the government. This will allow you to register for an employer tax identification number, all licenses and permits as well. Your name is required on all documents, forms, and applications needed to run your business.

3) How to obtain a federal tax identification number?

If your business is going to have employees, you will need to obtain an identification number from our federal government. If you are a sole proprietorship and you are the only employee, you can use your social security number. You can apply for an Employer Identification Number online or by calling the Internal Revenue Service directly.

4) What about the state?

As with the federal government, your state and local governments will need to assign your business an identification number. Also, if you sell any type of product, you will need to obtain a seller’s license/state tax permit. Every state government has rules that govern small businesses. It is best to check with them to determine what is required.

5) Obtaining licenses and permits

Each type of business requires different permits and licenses. For example, if you operate a restaurant, you need special food handling permits. You must obtain industry-specific permits before opening the doors to business.

The small business association provides information designed to give new business owners an idea of ​​what it will take to get their business idea off the ground. It is not just about having a showcase and saying that you are going to sell a product. As you can see, there is a lot to the background of opening a business. Consult other small business owners and the SBA for information on how to get your new business off the ground.