Making a business official is a sequence, not a single filing. To learn how to make a business official, work through six steps in order: choose a legal structure, register your business name, file formation paperwork with your state, get a federal tax ID, register for whatever state taxes apply to you, and secure the local and industry licenses your city, county, and sector require. Each step depends on the one before it, and skipping ahead usually means doubling back.
Pick a Legal Structure First
Your legal structure drives everything else: how you’re taxed, how exposed your personal assets are, and what paperwork you’ll file for the rest of your business’s life. The common choices:
- Sole proprietorship. You and the business are the same legal entity. Nothing to file with the state to form one; you become a sole proprietor the moment you start doing business. The cost is that your personal assets are on the line for every business debt and lawsuit.
- Limited liability company (LLC). A separate legal entity that shields your personal assets from most business liabilities. Profits pass through to your personal tax return, avoiding the double taxation that hits corporations. This is where most small business owners land.
- Corporation. A separate legal entity owned by shareholders and run by a board of directors. Strongest liability protection, highest setup and maintenance cost. A standard C corporation pays income tax on its profits, and shareholders pay again on dividends.
Partnerships and S corporations are also on the menu, depending on how many owners you have and how you want taxes to flow. The SBA publishes a comparison of every structure with the tax and liability tradeoffs for each.
Register Your Business Name
Every state keeps a database of registered business names, usually through the Secretary of State’s office. Before you file any formation paperwork, search that database to confirm your chosen name isn’t already in use by another entity in the same state. Most searches are free and return results instantly online.
If the name is available, many states let you reserve it for a short window, typically 60 to 120 days, while you finish the rest of your paperwork. That blocks anyone else from grabbing it before you file.
DBAs and Trade Names
If you plan to operate under a name that differs from your legal name (as a sole proprietor) or your entity’s registered name (as an LLC or corporation), register that trade name as a DBA, also called a fictitious business name or assumed name. Where you file depends on your state: some handle it at the county clerk’s office, others at the state level, and a handful don’t require DBA registration at all. Check your Secretary of State’s website for what applies to you.1U.S. Small Business Administration. Register Your Business
File Formation Documents With Your State
Sole proprietors skip this step; there’s nothing to file with the state beyond a DBA if you need one. LLCs, corporations, and partnerships all require formal paperwork to come into legal existence.
For an LLC, the document is called the Articles of Organization. A few states use “Certificate of Formation” or “Certificate of Organization” for the same thing. For a corporation, it’s the Articles of Incorporation. Both cover the basics: the entity’s name, its principal address, and the name and address of its registered agent.1U.S. Small Business Administration. Register Your Business
Appoint a Registered Agent
Every LLC, corporation, and partnership must designate a registered agent, meaning a person or service authorized to accept legal documents and official government mail on the entity’s behalf. The agent needs a physical street address in the state of registration and must be available during normal business hours. Many owners hire a registered agent service rather than fill the role themselves, which spares them from being tied to a fixed address during business hours.1U.S. Small Business Administration. Register Your Business
Fees and Processing Time
State filing fees for forming an LLC range from roughly $35 to $500, with most states falling between $50 and $200. Corporation fees vary similarly, and some states charge more for corporations than LLCs. Most Secretary of State offices accept online filings, which usually process within a few business days. Mailed applications can take several weeks. Once approved, you’ll receive a stamped copy of your documents or a certificate confirming the entity exists. Keep it somewhere safe, because banks and landlords will ask to see it.
A rejected filing usually means lost time, not lost money. Most states return the documents for correction rather than keep your fee. Nearly every state now accepts electronic filings and electronic signatures; under federal law an electronic signature carries the same weight as a handwritten one for transactions affecting interstate commerce.2Office of the Law Revision Counsel. 15 U.S. Code 7001 – General Rule of Validity
Write Your Operating Agreement or Bylaws
Formation documents register you with the state. They say nothing about how the business actually runs. That’s the job of your internal governance documents, and this is where new owners often cut corners they shouldn’t.
For an LLC, the key document is an operating agreement. It sets each member’s ownership percentage, how profits and losses are divided, voting rights, and what happens if a member wants to leave or dies. Most states don’t legally require one, but operating without it is asking for trouble. With no written agreement, your LLC starts to look like a sole proprietorship or informal partnership, which weakens the liability protection that was the point of forming an LLC in the first place.3U.S. Small Business Administration. Basic Information About Operating Agreements
For a corporation, the equivalent is bylaws. Most states require corporations to adopt them, typically at the first organizational meeting after the Articles of Incorporation are filed. Bylaws govern how directors are elected, how meetings run, and what authority officers hold. Bylaws aren’t filed with the state, but the corporation must keep a copy on hand and make it available to shareholders.
Governance documents also protect your liability shield in a practical way. Courts can disregard an LLC or corporation and hold owners personally responsible for business debts if the entity isn’t treated as genuinely separate from the people who own it. Mixing personal and business money is the fastest way to lose that protection. Open a dedicated business bank account from day one, keep finances completely separate, maintain your governance documents, and actually follow them.
Get a Federal EIN
An Employer Identification Number is a nine-digit federal tax ID issued by the IRS. It functions as a Social Security number for your business. You’ll need one to file business tax returns, open a business bank account, and hire employees.4Internal Revenue Service. Employer Identification Number
The fastest route is the IRS online application at IRS.gov/EIN. It takes about ten minutes, costs nothing, and you can use the number right away. You can also apply by fax using Form SS-4 (expect roughly four business days) or by mail (allow four to five weeks). Phone applications are reserved for international applicants.5Internal Revenue Service. Instructions for Form SS-4
The application asks you to name a “responsible party”: the individual who owns or controls the entity and manages its funds. That person provides their Social Security number or individual taxpayer ID number. The responsible party has to be an actual person, not another business entity.6Internal Revenue Service. Responsible Parties and Nominees
Register for State Taxes and Insurance
Your EIN handles federal taxes. Most states layer their own registrations on top, and which ones apply depends on what you sell and whether you have employees.
Sales Tax Permit
If you sell physical goods, or in a growing number of states certain services, register with your state’s revenue department to collect and remit sales tax. The permit is sometimes called a seller’s permit or sales tax license. Registration is usually free, but you’ll owe periodic sales tax returns on a monthly, quarterly, or annual schedule depending on your sales volume. Failing to collect sales tax when required can leave you personally on the hook for the uncollected amount plus penalties.
State Unemployment Insurance Tax
Once you hire employees, most states require you to register for state unemployment insurance tax. The threshold varies: some states require registration the moment you pay any wages, others set a minimum dollar amount per quarter. Registration runs through your state’s workforce or labor department, and the tax is paid by the employer rather than deducted from wages.
Workers’ Compensation Insurance
Nearly every state requires businesses with employees to carry workers’ compensation insurance, though the employee-count threshold varies. Some states require coverage with the first hire; others start at three, four, or five employees. A few states, including Texas, make it optional for most private employers. Check your state’s rule before your first hire. Operating without required coverage can mean significant fines and personal liability for workplace injuries.
Local Licenses, Zoning, and Industry Permits
State and federal registration still won’t fully authorize you to open your doors. Cities and counties add their own requirements, and overlooking them is one of the most common mistakes new owners make.
General Business License
Many municipalities require a general business operating license, sometimes called a business tax receipt. Fees range from under $50 to several hundred dollars, depending on location and business size. You usually apply through your city or county clerk’s office, and some jurisdictions require annual renewal.
Zoning Compliance
Before signing a lease, confirm your business activity is permitted at that address under local zoning rules. A retail store can’t operate in a residential zone, and most manufacturing can’t set up in a commercial retail zone. Your city’s planning or zoning department can tell you what’s allowed at a specific location.
If the zoning doesn’t match your plans, you can request a variance from the local zoning board, which usually involves a public hearing and sometimes community support. Another option is a conditional use permit, which grants temporary approval so the community can assess the impact before anything becomes permanent. Build this timeline in well before your target opening date.
Industry-Specific Permits
Some activities require permits beyond a general license. Food service operations need health department permits and inspections. Professions like accounting, contracting, and healthcare require practitioner licenses that verify qualifications. Businesses dealing in alcohol, firearms, aviation, or broadcasting need federal licenses from the relevant agency.7U.S. Small Business Administration. Apply for Licenses and Permits
The SBA lists the business activities that trigger federal licensing and names the agency handling each one. For state and local permits, start with your state’s business licensing portal and your city clerk’s office. Operating without required permits can bring daily fines and forced closure until you come into compliance.
Keep the Entity in Good Standing
Registration isn’t the finish line. Every state imposes ongoing requirements, and falling behind on them can undo the legal protections you set up.
Annual or Biennial Reports
Most states require LLCs and corporations to file a periodic report, annually in most states, every two years in some, and as rarely as every ten years in a few. The report updates basic information: business address, officers or managers, registered agent. Filing fees range from nothing to several hundred dollars. Miss the deadline and you’ll owe late fees. Ignore it long enough and the state will administratively dissolve your entity, which means it loses its authority to conduct business. Anyone who keeps doing business on behalf of a dissolved entity may be held personally liable for debts incurred during that period, which erases the whole point of forming the entity.
Franchise Taxes
Around 20 states impose a franchise tax or privilege tax on business entities, often regardless of whether the business earned income. Minimums typically run from $10 to $800 per year, with some states scaling the tax based on revenue or assets. This is separate from income tax and separate from your annual report fee. If your entity is registered in one of these states, budget for it from the start.
Foreign Qualification If You Expand
Your business is “domestic” only in the state where it was formed. If you expand into other states by opening a physical location, hiring employees there, or generating significant revenue from clients in that state, you’ll likely need to register as a “foreign” entity in each one. The process is called foreign qualification, and it means filing a certificate of authority (or similar document) with the new state’s Secretary of State, appointing a registered agent there, and paying a filing fee. You’ll also need to confirm your business name is available in the new state; if it’s taken, you may have to register under an alternate name. Skipping foreign qualification when it’s required can mean penalties, loss of access to that state’s courts to enforce contracts, and back taxes.
One Rule That Changed
If you’ve seen references to the Corporate Transparency Act requiring small businesses to report their beneficial owners to the federal government, that requirement was removed for all U.S.-formed companies by an interim final rule issued in March 2025. Only entities formed under foreign law and registered to do business in the United States still have to file beneficial ownership reports with FinCEN.8FinCEN. FinCEN Removes Beneficial Ownership Reporting Requirements for U.S. Companies and U.S. Persons, Sets New Deadlines for Foreign Companies