Why is it important to register your business?
I would like to know the different reasons for registering and obtaining the necessary permits and licenses when starting a business.
The term "register" means different things in different countries. For example in my country (Barbados) we can register a business name and we can also incorporate a company.
What I want to say in response to your question is that whether registering or incorporating your business, the biggest advantage is that this brings a measure of formality that has some benefits for you and the business.
For example, most people would feel more comfortable writing a $500,000 check to Michael & Lorna Superstars Inc than writing it to either Michael De Leon or Lorna Barrow individually.
When it's time to light a fire under someone to get something done quickly, people will react differently when you're calling from Michael & Lorna Superstars Inc than when its Michael De Leon calling. (Of course this can change when you make a name for yourself).
With a formal business, people are unsure of the size and this means you can "appear" to be the size that works best for you but don't go overboard on the BF (as in Bovine Feces).
So what you should do is discus the form of business incorporation that would best suit your purpose and take it from there.
Wishing you lots of success...
So that the government can collect their taxes an make sure you are complying with the laws and regulations. And also for you not to impose penalties on yourself by not doing so.
Hi Michael, I am Not a accountant or lawyer however I do know there are tax and legal implications. In Canada most services or products charge and collect HST. You need to be registered and have a number to do this. Also if you are sued or the business goes bankrupt different rules apply. I would suggest you seek expert advice.
Hi Michael, apart for the good advice already given.
Another big reason to register, is even as a sole trader, is so that you can obtain the right type of insurance cover.
The level and type of cover will depend on the type of business, and your exposure.
It's all about risk reduction, and compliance to local and federal laws.
What do you mean by "register"?
There are two things: Incorporation and registering with the secretary of state
Incorporation/LLC: Gareth gives the correct answer for why to incorporate/LLC but you may not need that. You can just be a sole proprietor.
Registering with the state: You will have to do this if you plan to have employees or if the business you are in requires permits. You may have to register in several states, for example, if you did business in those states. You will do that because you want to pay the appropriate taxes and fees, etc.
Registering a company formalizes your business (LLC, C Corp, etc.) and outlines company ownership and governance. This is necessary to set up business checking/saving accounts, to obtain a tax ID (EIN), and to obtain permits and licenses where needed. Company registration is done at the state level.
Permits and licenses depend upon your type of business and can be local, state, or federal. Permits and licenses typically authorize your business to perform particular activities. You may not need any permits or licenses - it depends on your type of business.