In this age of digitalization and e-commerce, entrepreneurship has become highly accessible – anyone can set up their business today by identifying a market gap and providing a product or service that can fill that gap.
Starting your business from scratch requires numerous steps like market research, collecting start-up capital, business registration, and hiring employees. While registering your new business with the state or local government is not required to complete business transactions, it can make your entrepreneurial journey much more manageable.
Registration can help your business gain numerous legal and marketing benefits and make it visible in your respective state’s records, like the Tennessee secretary of state business search. More benefits include:
1. Opening Business Bank Accounts
Your business’s bank account can be your most valuable asset as it can help you make necessary financial transactions and secure credit for your business while keeping your identity safe. However, most banks require business registration proof to open an account. You can check out The Small Business Association in the United States, as it provides guides to help people open their business bank accounts.
Related: 10 Reasons Being An Entrepreneur Is Better Than Employment
2. Finances
If you have a small business, acquiring loans for growth and expansion can be challenging as the banks require detailed proof of income and business identity. However, getting your business registered with the state can make borrowing money easier for you.
A business registration certificate can strengthen your application for a loan or investment and even facilitate you in getting a credit card to establish your business’s credit score. It will also let you finance your business by raising capital through equity financing as a registered business. You will be eligible to sell your company’s shares to your potential shareholders or raise seed funding through venture capitalists.
3. Taxes and Liability
Registered businesses are required to get an Identifying Employer Number (EIN) from the IRS and their state. These legal requirements help you legitimize your business entity and assist you in the annual taxation process of your business, which is a legal requirement for registered companies. Having your business registered also encourages you to keep up with the legal requirements for the finance department by maintaining bookkeeping and accounting records, which are collected as proof of your annual taxation. This ensures that your business is paying taxes on time and your business income is accurately shown to the government.
4. Separate Legal Entity
Your registered business will be considered a separate legal identity by the government and have the same transactional rights as an individual human. You can buy property, carry out transactions, incur liabilities, or raise finance under your business name. This will ensure the continuity of the business and protect your private assets from financial risks associated with your business.
5. Credibility and Legitimacy
The fundamentals of the survival and growth of a small business include portraying credibility. A potential high-profile client like a multinational or government sector institution may be discouraged from purchasing if they do not find your business registered. In contrast, a registered company can boost consumer and investor confidence in your product or service. Registering your business with the government will also qualify you to apply for government schemes and grants.
6. Arrangements With Suppliers
Getting your business registered will also help you qualify for numerous discounts on your raw materials, as suppliers often reserve wholesale rates for companies with adequate paperwork and business registration. Business registration also makes your business eligible for government contracts and industry-based discounts.
7. Recruiting Employees
When your company is registered with the state, it can help you advertise for and hire full-time employees under state laws. You can route state taxes for your employees through your business through the state identification number you get during business registration. This can help you provide legal security to your employees under state laws. The government will have a record of your employees under your company’s name, which can give them a sense of security and help you attract the best talent. A registered business will also help you quickly advertise your job openings through billboards, newspapers, and government-run employment schemes.
8. Business Travel
Registering your business can facilitate your visa application for any other country and help you expand your business operations worldwide. This can help you approach investors in other countries, collect capital for your business, and tap into new global markets. If your suppliers or clients are based in another country, registering your company with the state can help make your transactions easier. You can send your employees to travel across to close the deals much more quickly.
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Getting your business registered can help you gain legal identity, get loans, hire employees, and negotiate with suppliers. It will also make the taxes or liability dealings easier for your business and yourself and make any travel easier for you and your employees. Registration will also help you portray your business’s credibility among high-profile clients like multinationals or government sector institutions.
If you have an unregistered small business, we recommend reading SBA guidelines on business registration and registering your business as a legal identity as soon as possible. This will help you with business continuity and protect you from any debt. If you are still unsure about the business registration process, you can contact your state’s registration office or check their website.
