Registering your business with the government yourself

First Financial Franchise Purchase, Starting a Business 0 Comments

Registering your business and opening a bank account

There are 2 very basic steps to legally opening a business in most states.  First is to register your corporation (C-Corp) or Limited Liability Company (LLC) with the Secretary of State.  Second is to apply for an EIN for your business from the IRS.  An EIN (Employer Identification Number) is like a Social Security number for your business and without it you can’t even open a bank account.

Time is money

Two things may delay your registration.  One is errors on the application.  Most business registrations are fairly straight forward.  Simply find the application and fill it out, but be sure to carefully put down the correct information as requested on the application. You will have to mail in the signed application with a check and if there is a mistake they will send it back delaying you by 2-3 weeks.  Most registrations cost approximately $125, that amount will vary state to state.

Second, be sure to pick a unique name for your business, otherwise the application will be rejected.  You can search all the business names registered in the state from the Secretary of State website.  Check business name as well as fictitious/DBA names to be sure the name is not taken.

The Secretary of State will mail you a certificate, verifying ownership of the business.  At this point you can use the number on that certificate to apply for your EIN from the IRS, which can be done online instantly here.

Do I need an operating agreement or need to issue stock

If you are the only owner of the business and not raising money from investors, drafting an operating agreement or issuing stock certificates isn’t immediately necessary.  It’s recommended that you seek professional legal advice regarding those matters.  Obviously there is an expense to doing so, if you’re on a tight budget those are items that can wait until your business is profitable.

One trick to saving money on operating agreements is to repurpose an existing one from a previous business.  There are also online legal services that will assist you in drafting agreements of all kinds at a much lower cost than a traditional attorney.  It’s advised that you have a qualified attorney review any agreements you draft yourself just to be sure.

 

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