1. The Importance of Registering a Business
2. Reasons to Register Your Business
3. Where Should You Register Your Business?

Where should I register my business? Depending upon the state and local laws where you operate your business, you may have to register your business with one or more state, county, or local authorities.

The Importance of Registering a Business

Let's say, you specialize in making beautiful shoes with high-quality leather. You have been into this profession for over a decade and now your shoes have become so popular that people have started referring to them with your name (James shoes). You have a loyal customer base that prefers to wear only James shoes. However, all this while, you never bothered to register your business.

One fine day, another entrepreneur named John registers a company styled as James Shoes Company. This company starts manufacturing and selling shoes that are not as popular as yours, but interestingly, they are labeled as James shoes. This starts creating confusion among your customers and you start losing sales to your new competitor. So, you decide to sue John's company, but what are your chances of winning the case?

The facts are pretty simple: John owns and operates a legally registered business, whereas your business does not exist in the eyes of law. Although you have been running a popular business, you fail to get any legal protection for it. If only you had taken out some time to register your business legally, your position would have been quite different.

It's often tempting to postpone registration or consider it to be something not that important for your business. However, you may lose years of hard work due to the lack of something as simple as registration. A registered business gives you legal recognition and you get to enjoy certain rights and privileges, which are not generally available to an unregistered business.

Reasons to Register Your Business

The following are some of the strong reasons for registering a business:

  • It gives a legal identity to your business and also offers legal protection. No one else can register a business name similar to yours.
  • Some types of business registrations protect you against unlimited liability. For example, registering your business as a corporation or a limited liability company (LLC) protects your personal assets even in the unfortunate event of your company not being able to meet its debts and liabilities.
  • Registration makes your business look more serious and appealing to customers, vendors, and investors. As a matter of policy, some companies even refuse to deal with unregistered businesses. Not registering a business, thus, slows down its growth.
  • Registration makes it easier to procure funds for your business. Most of the banks do not extend business loans to unregistered businesses. Similarly, investors don't feel comfortable in financing an unregistered business.
  • Registration paves way for perpetual existence of your business. Without registration, a business dies along with its owner. However, a registered business can be passed down to newer generations or transferred to a new management.

Where Should You Register Your Business?

Registering With Your State

State registration is the most common form of registration. State governments usually have a dedicated division or agency for regulating the formation and operation of businesses. Registering your business name with the state agency gives you an exclusive right to that name throughout the state. In some types of business structures, like corporations, LLCs, and partnerships, name registration is a part of the formation process, and you don't need to register your business name separately.

Registering With Your Local Authority

In addition to state registration, in some places, you must also register your business with the local authority of the city or county where you operate your business. Local authorities usually require you to obtain a business license. In some cases where you are not doing business in your own name, you may be required to obtain a fictitious name license.

Registering In Other States

If you have multiple places of business located in different states, you may have to register your business in each of those states, depending upon the law of each state. Sometimes, you may need to register your business in another state only because of the fact that you solicit orders from or supply goods to that state.

However, this does not mean that you need to go through the entire process of forming a business entity all again. After having formed a business entity in the state where your principal place of office is located, you only need to file certain returns in other states where your business activity creates a contact with those states.

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