Starting a new business is a big undertaking. Registering your company correctly is crucial to avoiding legal complications and ensuring the success of your venture. The process of registering a company differs slightly depending on the type of operation you’re creating, its structure and the state where it will operate. This article will provide an overview of the basics of the process and how to get started.
A company is a legally separate entity from its owners, meaning that the owners (called “shareholders”) have limited liability for the company’s debts and obligations. Companies are generally organized to earn profits from business activities, and they can be either public or private.
In order to be a legally recognized entity, a company must be registered with the state and federal governments. Many states have online processes for registering businesses, but others require paperwork or in-person filings. Most businesses will also need to obtain a federal tax ID, which is sometimes referred to as an Employee Identification Number.
Lastly, if you want your business to be eligible to bid on government contracts, it must be registered with the United States Patent and Trademark Office as a trademarked entity. Additionally, nonprofits and charities must be registered with the Internal Revenue Service as tax-exempt entities.
Finally, founders of a startup should decide on whether they’ll implement vesting periods for their equity to protect themselves in case of a relationship crisis or other issue that could affect the company. Having a vesting period will make it easier to resolve such issues and maintain a healthy working environment. register a company