Establishing a business name is a little more complicated than making a list and picking your favorite. You’ll use the legal name of your business on all your government forms and applications, including your application for your employer tax identification number, licenses, and permits.
If you’re using a name other than your personal name, then you need to register it with your state government so they know you’re doing business with a name other than your given name.
First thing’s first: Before you register, you need to make sure the name you want is available in your state. Business names are registered on a state-by-state basis, so it’s possible that a company in another state could have the same name as yours. This is only concerning if there’s a trademark on the name. Do a Trademark search of your desired name to avoid expensive issues down the road.
Speaking of who’s using which names online, see if your desired domain names are available by doing an online domain search. Do the same with your desired social media handles. If the domain name and/or social media handles you want aren’t available, then some of you might consider changing your business name.
For new corporations and LLCs: Your business name is automatically registered with your state when you register your business – so you don’t have to go through a separate process. There are rules for naming a corporation and LLC, which you can read about here.
For sole proprietorships, partnerships, and existing corporations and LLCs (if you want to do business with a name other than their registered name), you’ll need to register what’s called a “Doing Business As” (DBA) name. You can do so either by going to your county clerk office or with your state government, depending which state you’re in. Learn how to do that here.
Want to trademark your business name? A trademark protects words, names, symbols, and logos that distinguish goods and services. Filing for a trademark costs less than $300, and you can learn how to do it here.
Lesson 2.3 Seller’s Permit
What Is It and Do You Need One?
If your business sells tangible property to the public either as a wholesaler or retailer, then in most states, you need to apply for a seller’s permit. “Tangible property” simply means physical items, like clothing, vehicles, toys, construction materials, and so on. In some states, a seller’s permit is required for service-oriented business, too, such as accountants, lawyers, and therapists.
The seller’s permit allows you to collect sales tax from buyers. You’ll then pay that sales tax to the state each quarter by putting the sales tax permit number on the state’s tax payment form.
You can register for a seller’s permit through your state’s Board of Equalization, Sales Tax Commission, or Franchise Tax Board. To help you find the appropriate offices, find your state on this IRS website.
2.4 Business License
What Is It and Do You Need One?
Almost every business needs some form of license or permit to operate legally – but the requirements vary, which can get confusing. Which specific licenses or permits does your business need? To figure that out, go to this SBA.gov website and select the state from which you’re operating your business. It’ll tell you the specific license and permit requirements in that state.
2.5 Small Business Taxes
Business owners are obligated to pay specific federal taxes, and the amount of those taxes is determined by the form of business entity that you establish. All businesses except for partnerships need to file an annual income tax return. Partnerships file what’s called an information return.
When you think of business taxes, you think of the federal and state income tax rate. But the National Federation of Independent Business says most small businesses don’t pay tax at a business rate. About 75% of small businesses are not corporations. These large percentages of small businesses are pass-through entities, paying tax at the personal rate.
The only type of business that pays taxes on its own is a corporation. The corporation owners don’t pay any tax on the corporation’s profits, but they are taxed on their income if they work as employees and they are taxed on dividend income they receive.