Technically speaking, you might be able to make your first sale without officially registering your business. But incorporating and registering your business makes it official in the eyes of the government and of your customers, and it can offer protections that a sole proprietorship doesn’t.
Though it might sound tedious and daunting, after you start your business, registering your business is more straightforward than you may think.
How to register a business
Registering your business is a fairly straightforward process, but it’s important to do it right to avoid complications down the road.
Pick your business name
It probably goes without saying that naming your online store is super important. And choosing one that’s both on brand and available can be difficult. When brainstorming, it’s best to cast a wide net to first see what sticks and then hone in on your top ideas (try our business name generator).
Once you’ve nailed down a few favorites, you’ll need to check if they’re available. Conduct a search within your local jurisdiction’s business database to see if any other businesses have registered under a similar name.
Other important considerations when choosing your business name include:
- Social media. Are relevant social media handles available, or is someone else already using your chosen name?
- Domain name. Conduct a quick domain name search to see if your branded URL is available.
The step of actually registering your business involves two key components:
- Choosing your business structure and incorporating as such
- Getting your employer identification number (EIN)
Each business structure requires a different process for registration. Sole proprietors, for example, don’t need to do anything. Corporations, on the other hand, need to file articles of incorporation or similar corporate documents.
Regardless of business structure, an EIN is critical. It protects your Social Security number (SSN) and also gives your business its own identity. This identity means your business can build credit.
Check with each entity
Just like each business type has its own registration process and requirements, each physical location has its own parameters as well. It’s important to check with federal, state, and local jurisdictions to find out what you need to legally register your business.
Additional requirements may include permits, licenses, articles of incorporation, forms, and fees, among other things.
Register for taxes
In most places, businesses have to pay sales tax and potentially other applicable taxes or fees. Because sales tax varies by state, you’ll need to register in each state where you plan to sell.
Some states don’t collect sales tax, so there’s also no registration:
- New Hampshire
For the remaining states, check with them directly to find out what the process entails.
File for any trademarks
A trademark is “anything that’s considered a source identifier,” and your brand can qualify as such. You can do this unofficially—simply start doing business under your branded name and/or with your logo so you can establish a reputation. Or you can take an official approach, enlisting a trademark attorney who can help you secure your name. If you go the official route, you’ll want to make sure you patent your business name at both the federal and state levels.
Tips for registering your business
While registering your business is fairly straightforward, there are a few things to keep in mind to make the process smoother.
Before you start any applications, create a list of what you need. This will include things like your basic personal and business information, EIN, forms, licenses, permits, fees, etc. Have this information handy so you can fly through the application process.
For more complex business registration, such as heavily regulated industries, it may be a good idea to enlist the help of an expert. Qualified tax professionals and business attorneys can guide you through the process, answering questions along the way and even taking care of some of the steps for you. Shopify Experts has a whole directory of sales tax pros who can provide assistance with US state sales tax and liability, for example.
It’s always best to check directly with official location- and industry-specific sources for the latest information regarding business registration requirements. Make it a habit to check on your licenses, permits, and registrations each year—for accountability and to help you remember, you might do it at tax time. Set up calendar reminders for any expirations or renewals as well.
Set up your business bank accounts
While not a required step for business registration, it’s advisable to set up dedicated business bank accounts. Separating your business and personal bank accounts will make your life easier and protect your personal assets. It simplifies bookkeeping, tax time, and audits; builds credit history for your business; and makes things easier to organize overall.
To set up your business bank accounts, you’ll need to first choose a bank that suits your needs. The process to open the bank accounts and any lines of credit is much the same as it is for personal banking—you simply need your taxpayer identification number (EIN) and other basic business information when you fill out the necessary application(s). Some banks require you do this in person while others facilitate the process online.
Set up payroll
Once you’ve hired employees, you’ll also need to set up your payroll process. When you do payroll, you need to properly withhold taxes and maintain clear records in the process. Luckily, many business accounting software have payroll functionality built in, making this process a lot easier. But it still requires you set it up—and you have to ensure the sales tax is properly configured. Check with your local tax office or hire a vetted expert for guidance.
Kickstart your business with Shopify
Shopify has many integrations with business accounting software to make it easier to manage every aspect of your business from a centralized location. With thousands of third-party apps and integrations to choose from, you can build a virtual business command center.
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Business registration FAQs
Can you run a business without registering it?
How much does it cost to register a business?
DISCLAIMER: These guides are for informational purposes only and do not constitute professional legal or tax advice. Please consult independent legal advice and your own tax advisor for information specific to your country and circumstances. Shopify is not liable to you in any way for your use or reliance on these guides.