Top Five Accounting Tips: Don’t Forget To Register Your Business - Landmark

“You don’t know what you don’t know.”

Does this statement ring true to you? Those who are just starting a business often struggle to find the information they need to successfully get their idea off the ground. There are articles out there to help you establish your sales tactics, teach you about manageable growth, and manage your finances, but very few help you take that first step.

If you are concerned that you are missing an important step in starting a business, don’t fret; we can help. One of the most commonly overlooked steps in starting a business—and something you should do before you do almost anything else—is to register your business with your state.

State Business Registrations

To operate your business as an entity outside of yourself, you must register it with your state. You can treat state registrations like red tape requirements if you’d like, but we recommend that you look at the process as an opportunity to finally answer the tricky questions that you’ve been wrestling with. As you go through the registration forms, take a critical eye to your business practices and understand why you are checking certain boxes. If you can feel confident that you checked the right box, you’ll be off to a great start.

  • Selecting an Entity Type
    By registering with your state, you are legally forming your business. This one decision will impact your commercial standing, your financial risk, and your tax position. Since so much of your success rides on this one decision, seek the advice of a lawyer and a CPA to help you make the right choice. Partnerships, LLCs, corporations and nonprofits are all treated differently under the law. Be familiar with your entity’s operational parameters, and if more than one person will own the business, create an operating agreement.
  • Choosing an Entity Name
    Your Secretary of State’s office will be able to tell you your state’s business naming requirements. For example, in Arkansas, every corporation must include the word “Corporation,” “Incorporated,” or “Company” in its name, or a shortened version of those titles. You should also do a quick search to see if your chosen name is trademarked.
  • Filing Your Documents
    Each state’s registration process is different, but in general to start a business, you will need to do the following:

    • Create Your Articles of Incorporation or Articles of Organization
      Your Articles of Incorporation/Organization should include your entity’s name, address, the number of shares that you are issuing (if you are a corporation), information about your directors or incorporating team, and the business’s purpose.
    • Select a Registered Agent
      Registered agents will represent you in all manners to the state. You can be your own registered agent, but many businesses use commercial agencies that correspond with the State on your behalf.
    • Send Payment
      You will have to pay a filing fee to register your entity. Most states also require you to pay a fee each year thereafter when you file your entity’s Annual Report.

Other Registrations

Registering your business with your state’s business administration office is just the first step. From there, you may need to register with other agencies, including some of the following:

  • Internal Revenue Service
    You need to contact the IRS if you (1) need an Employer Identification Number (EIN); (2) want to apply for tax-exempt status; or (3) elect into S Corporation treatment.
  • U.S. Patent and Trademark Office
    Contact the Patent and Trademark Office if you want to trademark your business name, your brand, or your product.
  • Business Licenses
    Your industry or occupation may require you to get a license before you can open for business. Contractors will need to obtain a contractor’s license; a liquor store will need acquire a liquor license; a hair stylist will need a cosmetology license; etc.
  • State Sales Tax Administration
    Evaluate your state’s sales tax applicability and determine if you will need to register and begin collecting sales taxes. Even if you’re not required to collect sales taxes, you may be liable for use taxes. You may need to register in more than one state.
  • State Payroll Authority
    If you hire employees, you will also need to register for payroll tax. Your payroll tax administration will let you know how frequently you need to file returns and remit payroll taxes.
  • City Business Licenses
    Your local government may require specific permits and licenses with each municipality having its own unique regulations. This includes things like a building permit, alarm permit, zoning permit or a signage permit.

Next Steps

Starting a business is intimidating, and that’s why so many people give up before they even begin. The great news is that each day, you know more than you did the day before. And Arkansas has many resources like the Arkansas Small Business and Technology Center, Startup Junkie, Arkansas Regional Innovation Hub, Dream It Do It and the Arkansas Small Business Association to help you with the guidance you need.

Keep researching, reach out to your networks and build a team of advisors you trust. If you’d like a Landmark CPA on your team or a professional to double check that you’ve done everything correctly while you are starting a business, contact us today.