Top 4 Government Records Each and Every Fresh Business Proprietor Should Obtain
Most new business owners figure out the paperwork by trial and error, usually after missing a deadline or getting a rejection letter from a bank. There’s a better way. Four documents, filed in the right order, cover almost everything you need to open a bank account, hire your first employee, and legally protect your personal assets.
Americans filed roughly 5.5 million new business applications in 2023 alone (U.S. Census Bureau), and that pace hasn’t slowed much since. With that many people starting businesses, getting the filing sequence wrong is common – and expensive to fix later. Here’s the order that actually works.
Get your EIN before anything else
The first thing you need to secure is Your Employer Identification Number. These are free from the IRS and the online application only takes about ten minutes, assuming you already have your business structure figured out. You’ll need it to open a business bank account, run payroll, or file federal taxes.
Even if you’re a solo owner with no employees, you should still do this. The EIN won’t cost you anything and it’s generally a good idea to separate your own SSN from your business dealings if only to avoid identity theft. (Your SSN is the golden ticket to all your personal info, after all.) The mistake most people make isn’t skipping the EIN entirely – it’s putting off the step until you’re at the bank, paperwork in hand, and you realize you need to mail in or fax a form and wait for a response.
Pull your local business license
People often miss the fact that state formation and local licensing are two totally unrelated systems, and they mistakenly believe that once their LLC or corporation is approved by the state, they’re good to go. They’re not. Business licenses are issued by cities and counties, and that process applies even if you’re running things out of your spare bedroom and have zero foot traffic.
Requirements vary widely by city – some charge an annual flat fee for a business license, while others require you to project your revenue and pay an amount based on what you think you’ll earn. The biggest discrepancy tends to be with online sellers and home-based businesses who don’t realize they should be seeking a “storefront license.” Contact your city or county clerk’s office directly, as it’s not automatically generated once you’ve filed with the state.
By this point, you’re dealing with three separate filing systems – federal, state, and local – each with a unique timeline and a unique portal to log into. If the idea of managing all of these registrations while simultaneously trying to get your business off the ground seems too daunting, you might consider letting a service like Gov Doc Filing take care of the paperwork for you, and allowing you to focus on the parts of your business that only you can run.
File your formation documents with the state
This is the step that effectively brings your legal entity into existence. LLCs file Articles of Organization. Corporations (whether taxed as C-corps or S-corps) file Articles of Incorporation. Until that paperwork both gets submitted and gets approved by the state, you’re, by definition, operating as a sole proprietorship — and that gives your business creditors a direct line to your personal funds with no interceding limited liability protections in place.
Cost and approval times vary wildly state by state, but most will hit somewhere between $50 and $500. Approval takes a few days to a few weeks. With a couple of exceptions, you can assume the western two-thirds of the country will charge you more than the eastern third of the country, and your approval window will be twice as long. Oh, and you’ll need to know the business gateway around half a dozen puzzle locks on a government agency’s terrible 1990s-style website.
If you are operating under a name that is different from your exact legal entity name, you will also need a so-called DBA (“doing business as…”) registration at this point. And you will need a registered agent listed on this filing, too. (Registered agents are individuals who have to have a physical address in the state, who can receive legal notices on your company’s behalf. Who, not coincidentally, usually charge for this as a service.) That one mistake of “we’re just testing an idea and won’t have any legal liabilities beforebus we form!” is the most expensive mistake on this list, because any liability you incur before formation un-legally-shields part of your liabilities by the act of forming later… stays with you personally.
Register for a sales tax permit before you collect a dollar
You are required to obtain a sales tax permit (also known as a seller’s permit, reseller license, or sales tax exemption certificate) if you intend to sell tangible personal property or taxable services. The permit is required by businesses that sell, lease, or rent goods and will enable them to collect sales tax from customers and resell the goods.
Businesses are often required to submit sales tax returns on a monthly, quarterly, or annual schedule. Tax rates, rules, and regulations vary from jurisdiction to jurisdiction. Once your application is completed, your state assigns you to a filing frequency based on your estimated sales volume. This filing frequency is subject to change if your sales volume increases or decreases.
It can feel awfully difficult to parse this, so just keep in mind that back taxes and penalties begin accruing the moment you open your doors, collect that first 7% of sales, and delay your filing. Also remember that it’s often enough to cross state lines electronically; most states consider a laptop or a phone stored in a warehouse to be nexus.
These four are the floor, not the ceiling
Obtaining an EIN, submitting formation documents, obtaining a local license, and applying for sales tax establish your legal operation. However, it’s not the end of your responsibility. Most states demand an annual report to ensure your company is in good standing. Miss one of these and you could be facing late fees, loss of liability protection, or eventual administrative dissolution.
Your registered agent must also be in good standing, as a lapsed agent equals a missed legal notice – something you may not be aware of until it’s too late. For the state-specific expectations in your unique circumstances, the SBA’s resources are a good place to start building your benchmark. Keep these four filings as your “getting your ducks in a row” checklist and then create a calendar for what else you predictably need to file. The businesses that survive their first year in a lot of early-stage industries aren’t the best competitors in the vertical, they’re just not the guys who missed the form.
