Starting a business is an exciting and challenging adventure. When registering business names you must decide what form of business entity you want to start. This determines the amount of paperwork you will have to file, your personal and taxes that you will have to pay. The following is a general checklist to help guide you with the important steps to take.

Develop your business plan

Once you have structured your business plan and are ready to put it in place, the next step is to complete the necessary registration requirements.

Determine your legal structure of your business

When establishing business names it is important to determine which form of business structure you will need for your business. The four most common forms of business structure are: sole proprietorship, partnership, corporations and limited liability company. Each type has their advantages and disadvantages and should be taken into consideration. Choosing the appropriate structure for business names will be one of the most important decisions make so you may need the advice from your accountant to help you identify the differences and make the best choice for you!

Choose your business name and domain

Choose something catchy. Something that sets you apart from the rest. Something that will make your customers remember you.

Register your business names

You may register your business names with the Department of Assessments and Taxation. If your business is a sole proprietorship, you do not need to register your business with the state. If you decide to create a corporation, LLC, a non-profit, a or a partnership (limited, or limited liability), you will need to register your business and file certain documents with your state government. Many states require a sole proprietor to use their own name for the business name unless they formally file another name as a trade name, or a fictitious name so check with your state.

Obtain a Tax I.D Number

Whether Home-Based, Online, or at a commercial location every new small business is required to have its own tax ID number depending on the particular facts of your business. A state tax id can be an employer number or a wholesale tax ID number. Then there is a business license number that you get and it is essentially another city tax ID number. You can apply on line at the IRS website. The online application asks the questions, you provide the answers and, just like that, you get your EIN immediately. You can then download, save, and print your EIN confirmation notice. Apply online now.

Sole Proprietorship

Sole proprietorships or general partnerships require no legal entry formalities except compliance with State and local licensingand taxation requirements. A business owned and managed by one individual who is personally liable for all business debts and obligations.

Partnership

A partnership is the relationship that exists between two or more persons who join to carry on a trade or business. Each person contributes money, property, labor or skill, and expects to share in the profits and losses of the business. A partnership must file an annual information return to report the income, deductions, gains, losses, etc., from its operations, but it does not pay income tax. Instead, it passes through any profits or losses to its partners. Each partner includes his or her share of the partnership’s income or loss on his or her tax return.A single business owned by two or more people.

Corporations

Forming a corporation, prospective shareholders exchange money, property, or both, for the corporation’s capital stock. A corporation generally takes the same deductions as a sole proprietorship to figure its taxable income. A corporation can also take special deductions. For federal income tax purposes, a C corporation is recognized as a separate taxpaying entity. A corporation conducts business, realizes net income or loss, pays taxes and distributes profits to shareholders.A legal entity owned by shareholders.

S Corporation

S corporations are corporations that elect to pass corporate income, losses, deductions and credit through to their shareholders for federal tax purposes. Shareholders of S corporations report the flow-through of income and losses on their personal tax returns and are assessed tax at their individual income tax rates. This allows S corporations to avoid double taxation on the corporate income. S corporations are responsible for tax on certain built-in gains and passive income.

To qualify for S corporation status, the corporation must meet the following requirements:

• Be a domestic corporation
• Have only allowable shareholders
  • including individuals, certain trust, and estates and
  • may not include partnerships, corporations or non-resident alien shareholders
• Have no more than 100 shareholders
• Have one class of stock
• Not be an ineligible corporation i.e. certain financial institutions, insurance companies, and domestic international sales corporations.A special type of corporation created through a tax election. An eligible domestic corporation can avoid double taxation (once to the shareholders and again to the corporation) by electing to be treated as an S corporation. 

Limited Liability Company (LLC)

A Limited Liability Company (LLC) is a business structure allowed by state statute. LLCs are popular because, similar to a corporation, owners have limited personal liability for the debts and actions of the LLC. Other features of LLCs are more like a partnership, providing management flexibility and the benefit of pass-through taxation. Owners of an LLC are called members. Since most states do not restrict ownership, members may include individuals, corporations, other LLCs and foreign entities. There is no maximum number of members. Most states also permit single member LLCs, those having only one owner.

when choosong business names a few types of businesses generally cannot be LLCs, such as banks and insurance companies. Check your state’s requirements and the federal tax regulations for further information. There are special rules for foreign LLCs. A hybrid legal structure that provides the limited liability features of a corporation and the tax efficiencies and operational flexibility of a partnership.

Non Profit

An organization engaged in activities of public or private interest where making a profit is not a primary mission. Some Non Profits are exempt from paying federal taxes.

Cooperative

A business or organization owned by and operated for the benefit of those using its services. Cooperatives are not a legal structure.