- 1). Select a business structure. A company may choose to exist as a corporation, limited liability company (LLC), sole proprietorship, partnership or limited liability partnership (LLP). Each business structure has its own tax and legal implications. For example, a business owner that elects to form an LLC will have personal asset protection against all business losses, debts and obligations. Furthermore, owners (members) of an LLC will be allowed to pass their share of business profits and losses to their individual or joint tax return. LLCs, LLPs and corporations must file paperwork and pay the appropriate filing fee with the state where the business resides, as a condition of formation. Sole proprietors and partnerships have no such filing requirements to operate a business.
- 2). Choose a name for the business. Sole proprietors and partnerships will operate under the name of the owner, unless the business owner files a "doing business as," also known as a fictitious business name, with the state where the business operates. LLCs, LLPs, and corporations typically operate under the name listed in their filing documents. All states prohibit new businesses from using the same business name as another active entity in the state. Furthermore, the business name selected may not be held on reserve in the state. Conduct a name availability search to determine if a business name is currently in use or held on reserve in the state where the business will operate. Most states allow new businesses to conduct a name availability search on their state website.
- 3). Request an employer identification number (EIN) from the IRS. New businesses may obtain an EIN via fax, phone, online or by mail. According to the Business website, all corporations, businesses with employees, partnerships, LLPs and LLCs must obtain an EIN. Businesses that apply for an EIN by phone or online will receive an EIN for immediate use. Applying by fax will cause a business to wait up to 4 business days to receive an EIN. Mailing Form SS-4 will cause a business to wait as long as 4 weeks to receive an EIN.
- 4). Register for state taxes with the state Department of Revenue. Businesses that have employees must obtain a state tax ID number from the Department of Revenue office where the business operates. Furthermore, businesses with employees must register for state unemployment taxes and worker's compensation insurance. Provide applicable formation documents for the business and a federal EIN to obtain a state tax ID number.
- 5). Apply for permits and licenses needed to operate the company. Businesses that provide certain services such as doctors, barbers or accountants will need to obtain the appropriate occupational license from the state where the business operates. Businesses engaged in retail sales will need to obtain a sales and use tax permit from the state or local government, as indicated on the Business website. In addition, zoning permits may be required depending on the location of the business. Every business must obtain a general business license to operate in their city or county. Contact the city or county clerk's office to ensure a business has all the permits and licenses needed to legally operate.
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