Choose and register your business entity. You can operate as a sole proprietor, a partnership, a limited liability company or a full-fledged corporation. There are significant tax and liability considerations involved in the choice of a business structure. There are also significant issues concerning the day-to-day management and control of the business. When you have made your choice, contact the agency that handles new business filings in the state where you are opening the business. Expect to pay a fee to register.
Register a business name. If you are using your precise legal name as a sole proprietor, you won't have to take this step. But if you want to use the name Sensational Software, you'll have to register it as your business name, which is known as a DBA, or "doing business as name," "fictitious name" or "trade name." Some states require registration with a state agency while other states require registration in the county where you are setting up your business. You'll want to check the state and country databases for names that are already taken; otherwise your registration will be rejected if another entrepreneur already has nabbed the name Sensational Software.
Obtain an EIN number, formally known as an Employer Identification Number or Employer Tax ID, from the Internal Revenue Service. If you are a sole proprietor with no employees, you don't need a EIN number. But if you have even one employee, you must obtain an EIN for tax reporting purposes. You can go to the IRS website and obtain an EIN online.
State Tax Identification
As your business gets off the ground, you may have to register for an array of state business taxes and requirements. Some states require a state tax ID for reporting sales taxes, state income taxes and employment taxes. You might have to obtain workman's compensations insurance. And almost all states levy a business or corporate income tax. The state and local tax page at the SBA website delineates the state and local tax issues you have to deal with in each state in order to start and build your business.
Licenses and Permits
If your business is actively supervised by a federal agency, you'll need to obtain the appropriate licenses from that agency. A software business likely will require you to obtain patent, trademark and copyright registrations. The SBA's business license and permits tool enables you to enter a city, state, Zip Code, and the type of business you are starting on its website to find out the specific licenses and permits you'll need for your software business.