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Registering your business with the federal government has its perks, regardless of whether you're required to do then. — Getty Images/alexsl

Starting a business is no easy feat, especially when it comes to the administrative and legal processes similar trademarking your business name, choosing the right construction, and registering your business concern.

Depending on the nature of your concern, you may need to register with your state government, the federal regime, or you may not need to register at all. If you're unsure whether you need to annals your business organisation on the federal level, here'southward what yous need to know.

Exercise I need to annals my business with the federal government?

The following lists a few of the most common factors that determine whether yous must federally register your business:

  • Business concern structure. There are many types of business structures, like sole proprietorships, corporations, LLCs and partnerships. While sole proprietors doing business under their ain legal names are not required to annals with the federal regime, well-nigh other structures, including partnerships and corporations, are. Additionally, if you lot want to benefit from tax exemption as a nonprofit or charity organization, yous'll have to separately register with the IRS as a tax-exempt entity.
  • Staffing. If you currently have employees or plan to rent employees in the future, yous'll need an EIN to operate your business. Co-ordinate to the IRS, an EIN will let you to "pay federal taxes, hire employees, open up a banking concern account, and employ for business organisation licenses and permits" — all crucial business concern processes.
  • Required business concern taxes. An EIN is required for any business that plans on filing Employment, Excise, or Booze, Tobacco and Firearms taxes.
  • Certain organizational interest. Near businesses that work with, or are otherwise associated with, trusts, estates, real estate mortgage investment conduits, nonprofit organizations, farmers' cooperatives and plan administrators need an EIN.
  • Other. The IRS cites a few other reasons why a concern would need an EIN, including whether yous withhold income taxes for a non-resident alien, or have a Keogh plan.

Even if you aren't legally obligated to annals with the federal government, there are some expert reasons to consider doing it anyway. If your business wants to file for trademark protection, you can annals with the United States Patent and Trademark function and protect yourself and your production on a federal level. You as well need to be a federally recognized entity if you e'er desire to apply for government contracts.

[Read: A Step by Step Guide to Starting Your Business organisation.]

Fifty-fifty if you lot aren't legally obligated to annals with the federal government, at that place are some good reasons to consider doing it anyway.

How to federally register your business

If yous've decided to register your business organization on a federal level, the procedure of doing and so is relatively simple. For most businesses, this simply means applying for a federal tax ID, too known every bit an employer identification number (EIN).

Your EIN is a 9-digit number that identifies your business's taxation accounts with the federal authorities. The IRS allows you lot to employ for an EIN costless of charge through several unlike channels, including online, by post, by fax or by phone. The person or "responsible political party" applying must have a valid taxpayer identification number, such equally a Social Security number or another EIN.

Once yous have an EIN, you tin also annals to pay your federal business taxes online through the regime's Electronic Filing and Tax Payment System.

In addition to an EIN, y'all can as well utilise for a DUNS number. Like your EIN, your DUNS number identifies your business similar a Social Security number identifies a person. Having one can help you establish credit for your business, so you can secure deals with creditors and suppliers. To obtain a DUNS number, visit the Dun & Bradstreet website. This process might accept up to thirty days.

CO— aims to bring you inspiration from leading respected experts. However, before making whatever business decision, you should consult a professional who can advise you based on your individual situation.

To stay on superlative of all the news impacting your small business, go here for all of our latest small concern news and updates.

CO—is committed to helping you starting time, run and grow your pocket-size business organization. Learn more than virtually the benefits of pocket-sized business membership in the U.Due south. Chamber of Commerce, here.

Published May 09, 2019