A week ago, I began the process of registering a business with the State of Utah. The process is not terribly complex, but can be a bit confusing if you don’t know what to do. I’m going to tell you about my process with it, I imagine most states have a similar process, though I don’t have experience with them. And finally, I would point out that you should not take financial or legal advice from bloggers.
1 – Get a Federal EIN
I started on the State of Utah’s website, but immediately discovered I needed a Federal EIN, so I’d recommend you start there first. You get this from the IRS website at: https://sa.www4.irs.gov/modiein/individual/index.jsp
First read the intructions, decide if you need an EIN and if so, begin the application. Next step is to choose the type. I want to run a business that has separate finances from my personal finances in order to protect my personal assets from business liabilities. Based on my understanding, Sole Proprietor and Partnerships were not going to meet my needs, and I chose a Limited Liability Company or LLC.
The rest of the process is pretty self-explanatory. There’s a part where you can choose to file extra paperwork in order to have your LLC move to Corporation or S-Corp status. I chose neither. You fill in some personal information, and then get a PDF document that contains your EIN.
2 – Register with the State
Utah’s starts with the OneStop Online Business Registration. You’ll have to create an account if you don’t already have one. This is the same account for all Utah State stuff, so if you’ve registered your car online, you’ll use this same account.
Choose to register a business, and you’ll be guided through a step-by-step process.
You’ll have to name your business. There can’t be any name conflicts with other existing businesses, and I was shocked at how many businesses were already registered and how many different things I had to try to get something unique. Once you find something and submit it, it goes off to the State, and I assume somebody manually checks it somewhere, but the process may take a few days.
How you answer the rest of the questions will depend on how you want your business setup, and again, I’d recommend you talk to somebody who knows business and who knows law before you get too far. But I can tell you what I chose.
Under Declare the Business Entity, I chose LLC as the type, and Domestic as the sub-type. I chose for it to be managed by a single member that was an individual.
When I got to the Define the Ownership and Management section, I entered myself as the Member and the Registered Agent.
Finally under Existing Account Information for this Business section, I put in the EIN that I got from step 1.
3 – Get a bank account
You’ll need the EIN you got from step 1 when you go to your bank to open a business account as well. I’d recommend that you put some money in that account up front, then take your business expenses out of this account. Keeping separate bank accounts for your personal and business finances is a good idea.
You’ll want to get a credit card for your business as well, but don’t be too surprised if you can’t get one right away. Since your business has no history or credit history, credit institutions understandably have a bit of trepidation about giving you a credit card. But I’ll try again in a year or so. It would certainly make things a lot easier for me.