Tips on Registering Your Company, Licenses, Incorporating and More
When preparing to create a business website, people always ask me...
Do I need to register a business name or setup a corporation to make money online with my website?
You are free to do everything in your own name if you wish.
However, as you start to make money with your site, you may decide to register one to protect and formalize your business.
Here is an overview of the different kind of registrations...
A DBA, or "doing business as," can be defined as a certified and official business name. Having a business name helps customers and investors find your business more easily, and in addition, it can help to protect and maintain the uniqueness of the business.
So if you're starting a website that is a sole proprietorship or partnership and your name is Mary Smith, you could be "doing business as" SweetScentCreations.com instead of your name.
Setting Up a DBA
Setting this up is a relatively easy process in most states. Get the ball rolling by taking a trip to your county clerk's office or at the agency in your state which handles DBA registrations.
Be sure that you review the secretary of state website for the state you want the DBA in. You will not be able to register that name if it is already on file in that state.
Once you have filled out the registration forms and submitted them, you will pay a relatively small fee to the agency in their state for registering the DBA.
After you have submitted the required forms and paid the fee, you can publish information about your new DBA in at least one local newspaper for at least four weeks.
Usually, a local newspaper will allow you to publish information about the business starting on the day after they purchase the advertising package.
The Benefits Of a DBA
When you establish a DBA for your business, you will be able to receive checks and payments in the name of the business, and in addition, you will be able to set up bank accounts and other accounts by using the name of the business.
Having a DBA also allows customers to easily recognize the business.
For certain types of businesses, registering as an LLC is vital. An LLC, or a "limited liability company," is the title that allows a person to do business as a separate entity from their person.
This ensures that you can never lose more money than you put into the business, and as a result, the LLC protects the personal assets and the funds of the business owner.
Registering an LLC
Registering an LLC is a fairly easy process, and you have to pay a fee to register.
Usually the fee is between $200 and $500, however, this fee can vary depending on the state that a person lives in and the state that their new business is located in.
NOTE: Delaware and Nevada have the lowest registration costs.
In fact, LegalZoom is a great solution for a number of different business licenses and registrations.
Once you have filled out the forms that are required to register an LLC, submit your Articles of Organization.
The Articles of Organization are documents that describe how a business operates, and these documents usually contain information regarding the management of the company and the profits and losses of the company.
The Benefits Of an LLC
Establishing an LLC provides many benefits for a business owner. The owner of an LLC will never be liable for any costs that are above the amount of the funds that the business owner has put into their business.
If a lawsuit ever occurs, a business owner can never be liable for more than the value of the business.
While ensuring that a person isn't liable in the case of a lawsuit may not be very important for some types of businesses. But for some independent contractors, a business or an independent contractor that is operating in a certain field may benefit greatly from establishing an LLC.
Businesses that earn their profits from construction, law, sales, health and beauty, medical care or direct sales can protect their assets by registering as an LLC.
An EIN may not be necessary if you are a contractor; however, for mid-size or large businesses, you may want to get an EIN for your business.
An EIN, or an employer identification number, is a number that will be used when reporting income and filing taxes for the business.
It's used independently of the SSN, or social security number, of the business owner.
If you are not planning on having any employees, you can file for a TIN, or a tax identification number.
A TIN is convenient if you are an affiliate marketer because most programs (and other money making programs) will ask for your social security number when you sign up. You can use your TIN instead.
Setting Up an EIN Or a TIN
Setting up an EIN or a TIN is a very easy process, and there may or may not be feels involved depending on your state and what the EIN is for.
You can establish a new EIN or a new TIN by visiting the IRS website and filling out the forms. Once you have filled out the forms, the you can begin to use your new EIN or TIN right away.
In addition, a business owner can visit a local IRS office, call the IRS hotline or print and mail in the forms that are required to receive an EIN or a TIN.
The Benefits Of An EIN Or A TIN
An EIN or a TIN allows you to pay taxes for the profits that your business earns independently, and a tax identification number for the business allows a business owner to report the profits of the business, the costs of the business and the revenue of the business more effectively.
Filing for taxes is much easier when a business has an independent TIN, and with the ease of obtaining an independent tax ID, getting an EIN or a TIN can be very beneficial for a business of any size.
No matter how you register your business or if you register it at all, you are required to pay taxes on everything you earn.
Some companies will send you a 1099 form with your total earnings. This means they have been reported to the IRS.
But even if they do not send you a form, you need to report this as "extra income" on your 1040.
Once you earn over a certain amount in a year (please check with your local tax professional to verify the amount for your location) then you can complete a Schedule C form and claim expenses for your business.
Are you ready to begin your website? Click here to learn about domain name registrations.
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