Debunking 3 Common Myths About Registering Your Business
When it comes to forming an LLC or corporation, understanding the steps of registering your business is a critical component of the overall process. However, there are many misconceptions people believe when registering their businesses that cause them to make mistakes and hurt their business. Here are just a few of the most common myths about registering your business to help you navigate through the process as efficiently as possible.
Once your business is registered, nobody else can use your business name.
Many people seem to take this myth as fact, and even though it may seem logical, it’s not quite that simple in reality. The truth is that even though one of the benefits of an LLC includes the right to claim your business name, it only applies to businesses that are registered in the same state. It doesn’t protect the same name from being used nationwide — you’d have to form your LLC in all 50 states to achieve that kind of individuality.
It’s always wiser financially to start your LLC in a state without income tax.
Of course, nobody enjoys paying taxes, but the fact is, this isn’t always a better decision. States like Wyoming, Texas, South Dakota, and Nevada don’t have income taxes, but again, it’s not as simple as it sounds. The tax laws of your business come from the state that it’s actually operated in.
“If you live in California, run your business from California, and make money in California, you most likely will be subject to paying California state taxes – even if you registered the business in Nevada,” explains SecretEntourage.
Keep in mind that when considering an LLC vs corporation, this rule still applies.
Once you’ve completed the process of registering your business, you’re done.
In 2010, there were 27.9 million small businesses in the United States, and many of them would probably like to believe this is true. However, in addition to registering your business, there are further compliance requirements that must be met. These typically include filing an annual report and paying a small annual fee. There are different compliance requirements depending on whether you’re forming an LLC vs corporation, so make sure you’re aware and can keep up with the demands.
Ultimately, knowing the truth behind these myths can help you navigate through the business registration process as efficiently as possible. Don’t let misconceptions get the best of your next venture.