How to Legally Register a Small Business: Simple Checklist

Register a Small Business: Launching a small business in the United States demands navigating legal requirements to operate legitimately and safeguard personal assets. This comprehensive checklist breaks down the process into actionable steps, tailored for aspiring entrepreneurs targeting the US market.​

Why Legal Registration Matters

Proper registration establishes your business as a distinct entity, enabling tax compliance, banking access, and liability protection. Without it, owners risk personal financial exposure from lawsuits or debts. Following official guidelines from the SBA and IRS minimizes penalties, which can reach thousands in fines.

Register a Small Business:​

Step 1: Choose Your Business Structure

The foundation of registration starts with selecting a structure that aligns with your goals, risk tolerance, and tax preferences.

• Sole Proprietorship: Easiest setup with no formal filing; you and the business are one, but personal assets are at risk.

• Partnership: General partnerships share profits but expose partners to joint liability; limited partnerships (LP) or LLPs offer more protection.

• Limited Liability Company (LLC): Popular for small businesses, providing pass-through taxation and personal asset shields.

• Corporation: C Corps suit growth-oriented firms but involve double taxation; S Corps avoid this via pass-through status, limited to 100 US shareholders.

Research state variations—Delaware favors corporations for investor appeal, while Wyoming offers low-fee LLCs. Operating agreements for LLCs or bylaws for corps prevent disputes.​

Step 2: Select and Verify Business Name

A unique name builds brand identity but must comply with laws.

Search your state’s Secretary of State website and the USPTO trademark database to ensure availability. Include entity designators like “LLC” or “Inc.” where required.​

File a DBA (“Doing Business As”) with your county clerk if using a trade name—fees are typically $10-100. Reserve names for 30-120 days in most states to secure it during setup.​

Step 3: Register with State Agencies

Formalize your entity by filing with the state’s business division.

• LLCs submit Articles of Organization (or Certificate of Formation).

• Corporations file Articles of Incorporation.

• Sole props register DBAs only if needed.​

Fees vary: $40 in Kentucky, $500 in Massachusetts. Expect 3-20 business days for approval; many states offer online portals and expedited options for extra fees. Appoint a registered agent for legal notices—services like Northwest Registered Agent cost $100-300 yearly.​

Step 4: Obtain an EIN from the IRS

An Employer Identification Number acts as your business’s Social Security number for taxes and contracts.

Apply free via IRS.gov online (instant issuance, 7am-10pm ET, M-F). Provide principal business activity, structure, and responsible party details (name, SSN/ITIN). International applicants use Form SS-4 by mail/fax.​

Even sole props benefit from EINs for privacy and professionalism; required for hiring, banking, or multi-member LLCs.

Step 5: Secure Licenses, Permits, and Tax IDs

Compliance extends beyond formation.

Register for state sales tax permits if selling goods/services—free or low-cost via revenue departments. Federal excise taxes apply to specific industries like fuel or telecom.​

Local requirements include business licenses ($50-400 annually), zoning approvals, and sector-specific permits (health for restaurants, alcohol for bars). Use the SBA’s License and Permits tool at sba.gov.​

Step 6: Set Up Finances and Insurance

Open a business bank account with EIN, formation docs, and ID—options like Chase or Novo simplify for startups.​

Obtain insurance: general liability ($400-1500/year), property for assets, workers’ comp if employing staff (mandatory in most states). Professional liability (E&O) suits consultants.​

Step 7: Comply with Employment Laws

If hiring, register for state unemployment insurance and comply with FLSA for wages/overtime. Use Form I-9 for verification; E-Verify for federal contractors.​

Ongoing Maintenance Checklist

Registration is not one-time:

State-Specific Considerations

Requirements differ: California imposes a $800 minimum franchise tax; Texas needs a public info report. Non-residents form in owner-friendly states like Nevada but register as foreign entities elsewhere.​

Pitfalls and Pro Tips

Avoid rushing without a business plan—SBA templates help at sba.gov/business-guide. Common errors include name conflicts, missing BOI reports (due 90 days post-formation), and ignoring local zoning.​

Budget $200-2000 total for startup registration. Consult attorneys/CPAs for complexity; free SBA counseling available nationwide.