Once you have started to set up a business, you may be contemplating how to register a business name for free. It is not compulsory to register your business name if you use your legal name for doing business. To become a legal entity, you simply need to file for a federal tax ID. However, registering your business offers important benefits, notably, tax and legal benefits along with personal liability protection.
When you register a business name, it cannot use by others, which protects your company against new business trying to use a similar name. If you haven’t registered business before, you might feel intimidated about proceeding. This article will walk you through the registration process to ease your concerns. And it also makes your entrepreneurship as a novice more secure and stable.
Also, read How To Come Up With a Business Name
How to Register a Business Name for Free
Things to Remember When Considering How to Register a Business Name
Selecting the right name can amplify the impact that your business creates in the market. This is why many businesses rebrand themselves with a new name that resonates better with customers. Even after years of being in the market. Thus if you have struck the chord on that right name, protecting it is essential to avoid future legal and branding complications. It’s crucial for you too to make sure that your business name hasn’t already been registered for another entity with the United States Patent and Trademark Office (USPTO). The name will get automatically rejected by USPTO if it’s already in their system.
To avoid the problem, thoroughly check your local business directories and verify if your preferred business name is available to use. The better way, though, is to use USPTO’s free tool to check your business name’s availability.
Learn more about How to Change Your Business Name!
Selecting Your Entity Type
When the name you plan to use for registering your business has been decided. You’ll be required to choose what type of entity suits your business. You can either register your business as an LLC (Limited Liability Company) or as a corporation. Some states offer other variations of these two types too. Compare the differences between the two to make a choice that will best fit your long-term goals for the business.
For tax-exempt status for a nonprofit corporation, you can register your business as a tax-exempt entity with the IRS.
Formation of LLC
An LLC is formed with one or more people as business owners. Each owner will be called a “member” of the LLC. And will file (jointly if more than one) Articles of Organization to form the business. The owner(s) must decide on each member’s percentage share of ownership and agree on the Operating Agreement. Which will use in managing day-to-day activities.
You can get an easy-to-fill-out document for the articles of organization from your state’s business or filing office or in some states; you may download an online form.
By registering as an LLC, you will have no personal liability for any debts accumulated by your company. What this means is your personal assets such as your savings, house, car, etc. It will be safe in case your business doesn’t turn out to be going the way you expected. Choosing to register as an LLC will also let you rent your personal wealth to your business.
So if you use your home to operate your business. For instance, you’ll be able to claim the space as an expense for your business and save some extra money to put into more productive uses. Being an LLC, you can also choose how your company will be taxed. The corporation taxation scheme will allow you to be taxed at a much lower rate for the first $75K of your earnings. You can choose the scheme for your registration from the IRS website.
Formation of a Corporation
A corporation can form by filing corporate organization documents in the state of the business’ location (i.e. by incorporation). A Board of Directors must be appointed during the incorporation, who will oversee the business, and agree on bylaws and operating documents.
The corporation may also a stock corporation having shares of stock. And the owners of the company will be the stockholders with their respective shares giving rise to corresponding rights during board meetings and operating decisions of the company.
The word “corporation’ may remind you of some multi-million dollar companies with hundreds of employees. But in reality, it is merely the conversion from a sole proprietorship into a formally recognized legal business entity.
Businesses can choose to register as an ‘S’ corporation, or a ‘C’ corporation when they are incorporated. There are no preconditions for registering as either. Being an ‘S’ corporation means your business will not be taxed as a business itself, i.e. You have the option of ‘pass-through taxation’. You’ll pay income tax based on the revenue, but not the actual business itself.
Alternatively, ‘C’ corporations are deemed as a separate entity with regard to taxation. This means your business will be subject to ‘double-taxation’ as you are taxed both for your personal income and on your profits from the business.
Regardless of the type of business entity you choose to register, there are no restrictions for your business to shift into another structure as it matures and your needs evolve with time.
Your DBA Name
If you plan to run your business under a different name than its officially registered business name. You may need to register a DBA (Doing Business As) name, known as a trade name or an assumed name. Laws for DBAs vary from state to state and might differ in the county or city level too.
Check your local, county, and state offices of business development, corporations, or small business to get the details for your location.
Registration of the DBA Name, if required, would conclude the required steps on how to register a business name for free.
Finally, if you register the business as an LLC. Then the registered business name will read with LLC as the last word. For an incorporated company it will include Inc. as the last word. The next steps for your business would be to get the necessary licenses and permits and open a business bank account in order to get your business up and running.
Read more How to Trademark A Business Name