When to Register Your Business

When to Register Your Business

It’s hard to know when to register your business as an LLC or Corporation.

It’s typically a good idea to register because it creates separate between you and your business. That means you won’t be personally liable for business debts.

But registering might not be feasible for your business on day one.

Here’s how to know when it’s the right time for you...

1. You Can Afford It

One big reason that people skip registering is to save money.

The cost depends on your state.

In most states, it’s around $100 per year, which isn’t too bad.

But in some states, like California, you’ll pay $800 minimum in LLC tax per year.

You may decide that isn’t worth it to register your business.

So make sure you can afford it and it’s worth the risk.

2. You Don’t Want the Risk

It also depends on your level of risk.

The main benefit of registering your company is limited liability.

This means your personal assets are considered separate from the business and won't be used to pay business debts. You won’t have to use your house, car, or personal bank account to pay business contracts or lawsuits.

You may want to register asap or you may be comfortable waiting it out.

It depends on when you start feeling nervous about being personally responsible for the business.

3. You’re in a Certain Industry

It also depends on your industry.

It's recommended to register asap if your business has a physical location.

It’s also a good idea to register soon if you sell certain products, like food, beauty, or kids products.

That’s because there’s a greater risk of legal drama when you have a location or sell certain products.

Also, some licensed professions like law and engineering (and other specific industries) may require registration in your state.

All in all, consider your costs, your industry, and the risks you can handle.



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How to Start Your Business Legally

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