26 Jun How to Register a Business
The first step in launching a new enterprise is to register the business with the necessary entities. However, formalizing said venture with the proper local, state and national governing bodies involves much consideration and a seemingly endless amount of paperwork. Each portion of the process can be critical, which is why an entrepreneur’s strategy should be to tackle each registration individually, rather than taking it all on at once.
Apply for an EIN
All new corporations and partnerships, as well as LLCs taxed as a corporation or partnership, must register with the IRS and receive an Employer Identification Number (EIN). This serves will serve as the the business’s tax identification number. Other corporate structures, such as a sole proprietorship, may not need to do this right away. It is highly recommended, though, as most businesses will need an EIN at some point.
Register at the State and Local Levels
Each state has its own specific registration instructions, but the processes are often similar. In the state of Illinois, businesses must be registered or licensed with the Illinois Department of Revenue. Many counties in Illinois require their own taxes in addition to the state and federal tax. Entrepreneurs can find out if their organization is subject to additional taxes or restrictions through their city or county clerk.
Where to register depends on the corporate structure. Sole proprietorships or partnerships, must be register their name in their county. If it is structured as an LLC or corporation, the name will have to be registered with the Illinois Secretary of State.
Obtain Necessary Licenses or Permits
Licensing and permits vary greatly within states, counties and even towns. For example, not all companies require a business license in the state of Illinois, but some cities or counties also have their own license and permit rules. Before any business is conducted, it is best to verify the requirements at all levels to avoid legal complications and potential fines.
Understanding state and local policies as they pertain to the business is key to a positive company launch. Consulting with an experienced attorney knowledgeable on state-specific law is an efficient way to ensure no steps are missed and the registration process runs smoothly.