Register Your Business with the IRS
How to Register Your Business with the IRS and your State: The Ultimate Guide
Starting a business is exciting and while it may be tempting to rush into the launch it’s important to register your business with the IRS. You can get your business up and running first but you should register it as soon as possible, especially before you start making sales or spending money for your business. This will ensure that you are paying taxes on your income and that you have a good credit history for your business. In this guide, we will walk you through the process of registering your business with the IRS. We’ll also provide some tips on how to make the process go as smoothly as possible. Let’s get started!
Decide how your business will be structured
The first step in registering your business with the IRS is to choose a business structure. You can choose from a sole proprietorship, partnership, limited liability company (LLC), corporation, or S corporation. The type of business you have will determine which tax forms you need to file and how your taxes will be calculated. Here is an overview of each structure type to give you an idea of what your options are:
A sole proprietorship is the simplest business structure and is owned by one person. If you are the only owner of your business, you will need to file a Schedule C with your personal tax return.
A partnership is similar to a sole proprietorship but there are two or more owners. Partnerships must file an annual information return form, which includes the names and addresses of the partners as well as each partner’s share of profits and losses.
An LLC is a business structure that offers personal liability protection for its owners. LLCs can be owned by one person or multiple people. LLCs must file an annual report with their state, which includes the names and addresses of the owners as well as each owner’s percentage of ownership in the company.
A corporation is a business structure that is owned by shareholders. Corporations must file annual reports with their state, which include the names and addresses of the shareholders as well as each shareholder’s percentage of ownership in the company.
An S corporation is a special type of corporation that offers small businesses certain tax benefits. S corporations must file an annual report with their state, which includes the names and addresses of the shareholders as well as each shareholder’s percentage of ownership in the company.
You can learn more about each type of business structure on the IRS website or contact a business consultant or CPA from our directory for help deciding on a structure that is right for you.
Budget and pay for any necessary fees
There are usually fees associated with registering your business with both the IRS and the state. The amount of the fees will vary depending on the type of business you have and where you are located. You can expect both processes to cost you anywhere between $50 and $200.
The federal government requires a $75 fee to register your business with the IRS. This can be paid by check or money order made out to the “United States Treasury.”
In addition to the federal fee, you will also need to pay any state fees associated with registering your business. These fees can vary depending on the type of business you have and where you are located. For example, in California, it costs $70 to register an LLC while in Florida it costs $125. You can find a list of state-by-state requirements on the Small Business Administration website.
Gather all of the necessary documents
After budgeting for and paying any registration fees, you will need to gather all of the required documents. The specific documents you will need will vary depending on the type of business you have and where you are located. However, there are a few general items that you will need regardless of your business type or location:
- Your business name and address
- The names and addresses of all owners, partners, officers, directors, and shareholders
- A description of your business activity
- The date your business started or will start
Get an Employer Identification Number (EIN)
Once you have chosen a business structure and have all of your documents ready, you will need to obtain an Employer Identification Number (EIN). This is a nine-digit number that is used to identify your business for tax purposes. You need to do this even if you do not have any employees. You will need it to open a bank account, apply for credit cards, and when you file your taxes, and more. It works similarly to your personal social security number except this one is for your business entity and not a personal entity.
You can apply for an EIN online, by mail, or by fax. Go to www.irs.gov the IRS website for more information on how to apply. The process is relatively simple and shouldn’t take more than a few minutes. You will get a response from the IRS within four weeks.
Register your business with the state
The next step is to register your business with the state in which you will be operating. This is important as it will allow you to do business under a legal name and protect yourself from liability. Each state has different requirements for registering a business so be sure to check with your Secretary of State’s office or visit their website for more information.
Here is a list of secretary of state websites around the united states:
Now that you have registered your business with the IRS and the state, you are ready to start operating! Be sure to keep good records of all income and expenses so that filing your taxes is a breeze. You can read my blog on how to set up a bank account and a bookkeeping system as well, which you can do now that you have a registered business. If you have any questions, be sure to write or set up a consultation with one of our experts. We are here to help you succeed!
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