Starting a small business can be a gratifying experience. It’s also a difficult and sometimes overwhelming and stressful process. There are many tasks to complete, decisions to make and risks to measure.
One responsibility that’s a prerequisite for any new business is to register with federal, state and local agencies. Generally, most business types need to complete this step to conduct business. Certain legal and tax benefits may also come with registration.
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Is business registration required?
Business owners who structure their business as a limited liability corporation (LLC), corporation, partnership or nonprofit corporation generally must register their organization in any state, city or local jurisdiction where they conduct business activities. Examples of such activities include:
- The organization has a physical presence in the state, city or local jurisdiction
- In-person meetings with clients take place in the state, city or local jurisdiction
- A significant portion of revenue is generated within the state, city or local jurisdiction
- Employees of the business work in the state, city or local jurisdiction
Registration is not typically required for sole proprietors who conduct business using their own legal names.
How to register a business
The registration process depends on how the business is structured and where it conducts business. In many cases, a registered agent will be necessary to process official papers and legal documents on behalf of the organization. This person must be located in the state, city or local jurisdiction where registration occurs.
To register a business with a state, city or local government, owners generally need to provide the following information:
- Business name
- Business address
- Registered agent
- Ownership, management structure or directors
- Number and value of shares (corporations only)
- Doing business as (DBA) name (if using one)
Registering a business with state governments
Some state agencies accept online registration, while others may require forms to be filed via mail or in person. Ultimately, the information is sent to the secretary of state’s office, city or local agency, business bureau or business agency.
Note: The actual documents required and the submission processes vary by state, city or local jurisdiction.
Within 30 to 90 days after registration, business owners may have to submit additional paperwork to their state, city or local jurisdiction tax board. These documents are sometimes called initial reports.
Business owners that have divisions in multiple states, cities or local jurisdictions must register in the state, city or local jurisdiction where they formed their business and file for foreign qualifications in the others. This rule applies to LLCs, corporations, partnerships and nonprofit corporations. Owners can generally expect to pay taxes and annual report fees in the state, city or local jurisdiction of origin and all states, cities or local jurisdictions where they have foreign qualifications.
Filing for foreign qualification usually requires a certificate of authority from the foreign jurisdiction and a certificate of good standing from the jurisdiction of formation. Specific requirements and filing fees vary by state, city or local government.
Registering a business with the federal government
Aside from applying for an employer identification number (EIN), federal business registration isn’t usually necessary unless the owner wants to:
- Trademark a business, brand or product name
- Receive tax-exempt status as a nonprofit corporation
- Structure a business as an S corporation
Registering a business with city and local governments
Some cities and counties may ask owners to register their DBA if they use one. LLCs, partnerships, corporations and nonprofit corporations may also have to apply for licenses and permits. Actual requirements and registration processes vary by city and local governments.
Why should employers register their business?
Registering a business with government agencies might seem like a lot of paperwork, but it offers some potential benefits. In addition to building brand credibility with clients, registered companies may be able to take advantage of the following:
- Liability protections (LLC, corporation, S corp)
- Tax benefits, such as tax-deductible business expenses
- Business loans and capital investments
Business registration FAQs
How much does it cost to register a business in the USA?
The typical total cost to register a business with a state usually does not exceed $300, though actual expenses vary by state and business structure. Employers should check with the appropriate state department for pricing.
What documents are required to register a company in the USA?
The records needed for business registration depend on the business’s structure and the states in which it operates. Some examples include, but are not limited to:
- Articles of incorporation
- LLC operating agreement
- Certificate of limited partnership
- Bylaws or resolutions
Do I need a business license in the USA?
Unless they structure their business as a sole proprietorship, business owners generally must register their organization in any state where they engage in business activities.
How do I legally start a business in the USA?
Entrepreneurs have many decisions and tasks to complete before launching a new endeavor. At a high level, the basic steps to starting a business are as follows:
- Research and plan a business idea
- Write a formal business plan
- Locate funding sources
- Determine the business’s structure
- Register the business
- Apply for tax ID numbers
- Obtain licenses and permits, if necessary
Can I start a business without a work permit in the USA?
Foreign nationals and non-residents can establish a business in the United States, but cannot engage in operational or managerial duties without work authorization. In such cases, it’s not uncommon for the business owner to partner with someone authorized to work in the U.S. and let that person handle the day-to-day operations.
How do I start a self-employed business?
Many small businesses begin as sole proprietorships or general partnerships because they are the simplest and least costly business structure to establish and maintain. Owners may later register their business as an LLC, corporation or S corp for liability protection.
This guide is intended to be used as a starting point in analyzing business registration and is not a comprehensive resource of requirements. It offers practical information concerning the subject matter and is provided with the understanding that ADP is not rendering legal or tax guidance or other professional services. Please consult with your legal counsel.