Registering a company can often go wrong, especially, if you are new to this process. You don’t have to worry, as we got you covered. Being entrepreneurial can be tough as there are various factors affecting the business. The road to registering a company is not that easy, as it includes heavy paperwork and few requirements to fulfill the norms like- tax, legal, economic, etc. although a lot of the process can be initiated online.
The guideline mentioned below describes major steps that you need to know about before starting your business.
Step 1: Determination Phase
- Determine what exactly your business is about, what resources and permissions it might require & the capital investment required for getting things started.
- Most of you might not be aware of the fact that registering your company is not mandatory under certain circumstances. If you manage your business yourself using your legal name, then registration is not necessary at all. If this is the case with your business, then ignore this tiring process and proceed to set up your brand.
- Need for the protection of your patent, logos, trademarks and other secrets of your business.
- Choose the location for your business wisely. Changing the location of your business can be a lengthy a stressful process, as each of the 50 United States has its business regulations & taxation structure.
- Need for any special license from various government organizations for your services like, medicine, military supplies, biological supplies etc.
- If you are not from the US then you will have to take care of immigrations and get business visa for registering your company.
- Need for marketing, supply chains, and other support services that you might need to run your business.
- If some sort of tax incentives that you can avail.
Step 2: Planning Phase
1. Type of business Entity to form: Corporation or LLC
- You will not be allowed to take the same name if some other registered company that is offering the same services does exist. You will have to make a legal search for your company’s name. USPTO a government database of registered trademarks can help you with this process.
- Get a trademark and a tagline for your company’s name, keep in mind that the trademark and tagline is not copied from some other registered company. Companies have been sued and penalized for using taglines of other companies.
- Choose a name for your company that makes sense to the audience you are targeting to grow your business. Also avoid having names that can hurt sentiments of people, community, etc.
- Moreover, it also gives you flexibility when it comes to operation and management, making it an easy and efficient way to run a company. Sometimes, you may desire more formality, credibility, and oversight for your company. If that’s the case, you should see about starting an S-Corp instead, as GovDocFiling demonstrates.
In the United States you can form either a Corporation or LLC in any of the 50 States. Each of the 50 states has its own record of names; the proposed name of the company is only checked in the state where the registration process is initiated. Some US states like Nevada, Wyoming & Delaware are more business-friendly even for outsiders.
The table below gives a side-by-side comparison of two of the most common forms of business organizations- Corporation & LLC
|TAX||There is no tax on the LLC income||There is no tax except for two circumstances.Recognized built-in gains.Excess passive income.|
|Pass-through of Losses||Losses are passed through to members, subject to few restrictions.||Losses are passed through to shareholders.|
|Liability of owner||There is limited liability for owners & managers.||There is limited liability for shareholders, officers & directors.|
|Duration||Dissolves at the time specified in the agreement or upon the loss of a member unless other member decides to continue.||Indefinitely.|
2.Choose a location for your business:
You are not required to incorporate in the state where your business operates; you have the freedom to incorporate in any state you prefer.
3.Determine about company’s shareholders, officers, directors & capital investment:
How much share, at what par value and the capital contribution each of the shareholders will make in the company. Check if your company will require the board of directors & officers to operate the day to day operations. You will have to make a legal agreement and apply for a shareholder certificate in order to get your company registered. Related: Made in India: 20 Famous Indian Brands thriving throughout the World
Step 3: Action Phase
This final phase will be comparatively smoother if there aren’t any loopholes in the above two phases (Determination & planning).
1. Documents required for registering a Company
The below table shows the documents that are required to register a company.
|Formation||Articles of formation or organization||Certificates or articles of incorporation|
|Governance||Operating Agreement||Organizational minutes, bylaws & shareholder agreement|
|Ownership||Member certificate for each member||Share certificate for each shareholder|
|Tax||IRS Form SS4||IRS Form SS4|
2. Apply for Federal Employer Identification Number:
To open a bank account for your company, hire employees and for other taxation purposes you will need a federal employer identification number. In order to obtain the tax number you will have to pay the required fee & fill an IRS form SS4. Related: 15 best Big Data tools you need to know about in 2021
3. Open Company’s Bank account:
For doing business and registering a company you will have to open a bank account. Opening the bank account in your company’s name ensures that you document your financial transactions for tax return purposes, and can defend your company during a tax audit.
Documents required to opening a bank account-
In order to open a bank account for your company, you must be physically present, few banks will not offer services if you are not a resident of the country.
The above mentioned process for registering a company might be time consuming but isn’t that difficult as it seems. You can hire an agent that will help you save a lot of time & efforts; all you need to do is to provide him/her with the required documents. Keep in mind to provide genuine documents at all places; you will regret any sort of forgery sooner or later.