Under certain circumstances, it is possible to operate as a sole proprietorship without registering your company. However, choosing to incorporate and register your company will increase customer trust and provide protections that a sole proprietorship cannot provide.
If you are still in the planning stages of your business, check out our How to Start a Business guide to help you get started.
When you're ready, read on to learn how to register your business with your state and local governments.
How to register your business
- Choose your business name
- Please select the business type you wish to register.
- Register for an Employer Identification Number (EIN)
- Check the requirements for each business location
- Tax registration
- Apply for a Trademark
Registering a new business, whether you are registering as a sole proprietorship or another business form, is a fairly simple process. However, it is important to register your business properly to avoid complications in the future.
1. Choose a business name
It goes without saying that your online store needs a name, but choosing an official and brand name for your business can be tricky. When brainstorming business names, it's best to start with a broad selection, then narrow it down to your top ideas. (Need help coming up with ideas? Check out Shopify's business name generator.)
Once you've decided on a few favorite stores, you'll need to check if they're available. Search local business databases to see if there are other stores registered with a similar name.
Other important things to consider when choosing a business name include:
- Social media. Are relevant social media handles available or is someone already using the name you have chosen?
- Domain name. Do a quick domain name search to see if your branded URL is available.
2. Select the business type you want to register
Before you can register your business, you need to choose a business structure and incorporate accordingly. Common business structures include a limited liability company (LLC), a corporation (including C corporations and S corporations), a partnership, and a limited liability partnership (LLP).
To learn more about the most common business structures, read our guide, “The 4 Most Common Business Types and How to Choose One.”
Each business structure requires a different process for registration. For example, a sole proprietorship doesn't have to do anything, while a corporation must file articles of incorporation or a similar corporate document. If you choose an LLC, check out our state-by-state guides to California LLCs, Texas LLCs, and Florida LLCs.
3. Register for an Employer Identification Number (EIN)
Regardless of your business structure, an Employer Identification Number (also known as a Taxpayer Identification Number) is important. An Employer Identification Number protects your Social Security Number (SSN) and establishes your business as a separate legal entity, which allows your business to build credit and hire employees.
You can apply for an EIN on the IRS website.
4. Check the requirements for each business location
Just as each business structure has its own registration process and requirements, each location also has its own parameters. It's important to check with your federal, state, and local government agencies to see what you need to legally register your business.
Additional steps may include permit requirements, licenses, articles of incorporation, forms, fees, etc.
5. Tax Registration
In most locations, businesses must pay sales tax and sometimes other applicable taxes and fees. Because sales tax varies by state, you must register in each state where you plan to sell.
Some states don't collect sales tax, which means store owners don't need to register their business for tax purposes. These states include:
- Alaska
- Delaware
- Montana
- New Hampshire
- Oregon
For the remaining states, check directly with them to see what the process involves.
let's start: Shopify uses default tax settings for your online store, but you can customize your sales tax settings in the admin dashboard.
learn more: Small Business Accounting Basics: 12 Steps to Get Your Business on Track
6. Apply for a Trademark
If you are launching a brand or product with a unique name, logo, feature or slogan, you may be eligible for trademark protection. A trademark is something that is “considered a source identifier” and helps consumers recognize your brand or product.
Although you can “informally” establish a trademark by running a business and building a reputation, a safer approach is to register it with the appropriate trademark office, either on your own or with the help of a trademark attorney. This will protect your trademark from other companies that may try to use your idea for their own gain. At a minimum, make sure to trademark your business name with both state and federal governments.
Business Registration Tips
As you go through the process of registering your business, there are a few things to keep in mind.
organize
Before you begin filling out your application, make a list of what you will need. This includes basic personal and business information, your EIN, forms, licenses, permits, fees, etc. Have this information on hand to help you move through the application process smoothly.
Hire Help
For more complicated business registrations (such as in highly regulated industries), we recommend getting professional help. A qualified tax professional or business lawyer can guide you through the process, answer your questions along the way, and even take some steps for you. Shopify Partners provides a directory of tax professionals who can provide assistance with US state sales tax and liability.
Keep it up to date
It's always best to check directly with official local and industry-specific sources for the latest information on business registration requirements. Make it a habit to review your licenses, permits, and registrations annually for accountability and don't forget to check them at tax time. Set calendar reminders for any expirations or renewals.
Start your business with Shopify
Once you know how to register your business, you can start thinking about how to run it. Shopify provides tools and integrations that make it easy to manage every aspect of your business. Choose from thousands of third-party apps and integrations to build a virtual business command center.
Disclaimer: These guides are for informational purposes only and do not constitute professional legal or tax advice. Please consult independent legal and your own tax advisors for information specific to your country and situation. Shopify is not liable in any way for your use of or reliance on these guides..
How to Register Your Business FAQ
Can I operate a business without registering?
If you operate as a sole proprietorship, you can operate your business without registering. No formal procedures are required before you can make your first sale. Over time, as your business grows, you will need to register and incorporate.
Is it important to register your small business?
Registering your small business isn't required, but it makes it easier for consumers to recognize your business as a legitimate business, and it may be required for financial purposes, like qualifying for a loan.
Do I need to register my small business with the IRS?
While you probably won't need to register your business with the federal government to incorporate, registering with the IRS will give you a federal taxpayer identification number, protect your personal identity, and help you apply for business credit and open a bank account.
How much does it cost to register a business?
The costs of registering a business, which usually involves an application fee, vary from state to state and may be higher or lower depending on the business structure you adopt.
