Federal Business Registration: Everything You Need to Know
Your federal business registration is an important part of starting your business so you can pay taxes and be legally recognized.3 min read
2. Federal Tax Payments Using EFTPS
3. State Filing for Business Entities
4. Registering to Collect and Pay State Sales Tax
5. Registering Your Business in More Than One State
6. File a DBA or Fictitious Name Registration in Your State or County
7. Apply for Any Necessary Local Permits
8. Small Businesses and Federal Government Business
Your federal business registration is an important part of starting your business. You will need to register your business with the federal government in order to pay taxes and be legally recognized.
Receiving an Employer ID Number
One of the most essential parts of your federal registration is requesting an employer identification, or EIN. These numbers are tax identification numbers given by the IRS and are necessary for any business except for a sole proprietorship. EINs are easy and free to obtain, and you can file for and receive one immediately either by phone or online.
Your EIN will never expire, and that number will never be given to another entity. If you are a sole proprietor, you will use your social security number instead of an EIN. Business owners who do not have a social security number and are not residents of the U.S. will need to apply for an Individual Taxpayer Identification Number or ITIN.
Federal Tax Payments Using EFTPS
Once your business is federally registered, the IRS makes it really easy for you to file and pay income and payroll taxes directly online using the Electronic Filing and Tax Payment System. Once registered, you sign up and receive a password in a few weeks and then can begin filing and making payments. Your EFT account can be used to pay all your necessary taxes such as:
- Social Security
- Federal Income Tax
- Unemployment Tax
State Filing for Business Entities
To file your business type in your state, you will need to register at your Secretary of State's office at the business division. If your business will be a sole proprietorship, you will not need to register with the state. If your business operates in other states, you will need to register in each state.
Registering to Collect and Pay State Sales Tax
If you plan to sell any products or services that will be subject to sales tax, then you must apply for a state tax permit from your state's Department of Revenue. This process can often be done online and is easy to do. Once you have registered, you will need to set up a company process for collecting, reporting, and paying the tax.
Registering Your Business in More Than One State
If you will be doing business in another state, you will need to register. The definition of "doing business" can differ when it comes to income and sales tax. When registering your company in another state, you will be registering as a foreign entity.
File a DBA or Fictitious Name Registration in Your State or County
If your business will be operating under a different name than the original name that you filed, you will need to file for a DBA or fictitious name or trade name registration in your specific county. You may also be required to file this name with your state business division as well. Requirements vary from state to state.
Apply for Any Necessary Local Permits
Every locality varies, and there are different rules and regulations that you will need to follow. Some of the local permits you may have to apply for or ordinances you may have to address include:
- Building permits if you will be building your new location.
- Zoning variances if necessary for new buildings.
- Food handling and health permits if necessary.
- Fire inspections for new locations.
Small Businesses and Federal Government Business
The federal government is one of the biggest consumers of small businesses' products and services. It is estimated by The Small Business Administration that $425 billion is purchased by the federal government annually from U.S.-based small businesses. That is why it is so important for a small business to register in the appropriate federal venues to be considered to work on federal government contracts.
The government is required to purchase anything between a cost of $3,000 and $10,000 through a small business, but a small business must go through a certification process to be eligible to receive this work. To qualify for federal contracts, your business must:
- Have fewer than 500 employees.
- Average receipts less than $7 million annually.
- Be profitable and well-established.
- Be registered through the appropriate venues.
If you need help with a federal business registration, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.