identifying your business structure
Limited Liability Corporation
Doing Business As
1. Determine what business structure is for you
2. Simplified checklist for registering your business
Having an online business and/or working from home has a few advantages, including creating your own schedule, it is relatively low-cost, and it is lower risk. The two main disadvantages of having an online business and working from home can actually become points in your favor when you conquer them: non-traditional marketing and website maintenance.
Regardless of what your business is, what you sell, or whether you are in the Arizona desert or New York City there are many different avenues you can take to get your business started.
There are three main legal business structure you can fall under as a freelancer or work-at-home business:
A private business where two or more people share ownership in the business, including all decisions and aspects of running a business as well as all profits and losses.
Limited Liability Company (LLC)
A private business treated with the limited liability a corporation receives but is taxed like a partnership or sole proprietorship.
There is both a single-member LLC and a multi-member LLC.
The liability aspect legally distinguishes that members are separate entities their business and therefore can provide protections for members if the business encounters legal action.
The taxation aspect does not separate members from the business.
Freelancers, bloggers, brands, and online shops and businesses will more often than not fall under the legal structures of sole proprietorship and a single-member or multi-member LLC.
An unincorporated private business that is owned and run by one individual in which there is no legal distinction between the individual owner and the business.
This is the simplest and most common business structure. In fact, most of you probably already are deemed a sole proprietorship without even knowing it: for example, if you are a freelancer.
For tax purposes, you don’t need to be officially registered. Legally, you do still need to ensure you are properly registered with the government.
How to Register Your Business
Even though you may technically already fall under the category of sole proprietorship, all businesses need to make sure they are registered with their governments — especially if there are certain licenses required for your business in order to operate. There are also benefits that come with being a registered business, including applying for business bank accounts.
The Small Business Administration provides several free resources that you can use to learn more about what and how you need to register.
Simplified checklist of what you need to register for:
REGISTER FOR YOUR STATE AND LOCAL TAXes
- Partnerships, LLCs, corporations, and nonprofit organizations are required to register with state governments. Sole proprietorships do not need to register their business at the state level.
- You city/county/state’s website will provide more detailed information
- This is also where you go if you need a sales tax permit and/or a vendor’s license
REGISTER FOR PERMITS AND LICENSES
- This usually applies those businesses that sell regulated items like firearms and alcohol or certain professions that require licenses — for instance: cosmetologists, nurses, interior designers, architects, chiropractors, etc.
REGISTER FOR A TAX IDENTIFICATION NUMBER (TIN) FROM THE IRS
- This is used when filing your tax returns, but most entrepreneurs just use their social security number.
- If you hire employees, you will need an Employer Identification Number (EIN).
Register for your “Doing Business As” name (also called a fictitious name, an assumed name, a trade name, or a DBA name).
- The legal name of your business is required on all government forms and applications, including when you file your taxes or apply for a license.
- When you register any business, the government automatically registers the legal business name of your business under the personal name of the individual filing to register said business.
- To further clarify: without a DBA, Skill Space would have the legal business name as Amy Smith. However, with a DBA stating “Skill Space,” the legal business name of Skill Space is, in fact, Skill Space and we can operate that business, open bank accounts, and file legal documents using the name Skill Space versus Amy Smith.