By Ethan Adams
One of the most important but confusing parts of launching a company is the process of officially registering with the government as a business. There are a lot of different factors, benefits, and legal rules to consider, many of which vary by state and change relatively frequently (hence the confusion).
It may surprise you to find out that the answer to “Do I need to register my business to begin operating?” is actually no. You don’t. You can begin operating, selling, and generating revenue without doing a thing.
This is because without registering as a business entity, the government by default treats any revenue you make as self-employment income. In official terms, you’re automatically “registered” as a sole proprietor. For freelancers and nascent businesses, this can be acceptable to begin with. But for most, it’s in the best interest of both themselves and their business to go through the process and actually register with the government as a separate business entity.
While you should always seek the expert opinion of an accountant or startup attorney for the most accurate advice for your best interest, here’s a brief rundown of what options you have when you register or incorporate your business.
What about non-profits, B-Corporations, and other entities?
Ethan Adams is Manager of Startup Development at Future Founders.
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