Photo: Unknown, almost certainly employee of California Department of Fish an / Wikimedia Commons, Public domain, cropped

How to register a small online business in the US: beginner checklist

By FastBuySale Newsroom · 9 Nov 2026 · 14m ago

Who this checklist is for

This checklist is for people in the US starting a small online business, such as an online store, a digital products shop, a freelance service or a social media brand. It follows the U.S. Small Business Administration's business guide and IRS pages, and it highlights where rules vary by state. Print it and tick off each step in order.

Step 1: Choose a business structure

The structure affects taxes, personal liability and paperwork. The SBA describes the main options:

- Sole proprietorship: the simplest form, owned by one person, with no legal separation between owner and business.

- Partnership: two or more owners sharing profits and responsibilities.

- Limited liability company (LLC): a state-registered entity that can protect personal assets from business debts, with flexible tax treatment.

- Corporation: a more formal entity with shareholders, more paperwork and separate taxation in many cases.

Many small online sellers start as sole proprietors and form an LLC later if the business grows or carries more risk.

- [ ] Structure chosen after reading the SBA guide

- [ ] Liability and tax effects considered

Step 2: Choose and check a name

Pick a name that is easy to spell and not already in use. Search your state's business entity database, the US Patent and Trademark Office trademark search and domain and social media handles. A name that conflicts with an existing trademark can force a costly rebrand later.

- [ ] State business name search completed

- [ ] Trademark search completed

- [ ] Domain and handles checked

Step 3: File a DBA if you use a trade name

If you operate under a name other than your legal name, for example Jane Smith selling as Blue Pine Prints, you usually need to register a DBA, also called a trade name or fictitious business name. Depending on the state, DBAs are filed with the state, the county or both. The SBA notes that a DBA does not give legal protection on its own.

- [ ] DBA filing requirements checked for your state and county

- [ ] DBA filed if needed

Step 4: Form an LLC or corporation with your state

If you choose an LLC or corporation, you file formation documents, such as articles of organisation for an LLC, with the state where you form the business, usually through the Secretary of State. Filing fees vary by state, and many states charge an annual report fee or franchise tax. You also need a registered agent with an address in the state. If you form in one state but operate mainly in another, you may need to register as a foreign entity there too, which adds cost.

- [ ] Formation state chosen

- [ ] Registered agent named

- [ ] Articles filed and approval received

- [ ] Annual report deadlines noted

Step 5: Get an EIN from the IRS

An EIN is a federal tax ID for a business. The IRS says you need one if you have employees, operate as a partnership or corporation, or meet other conditions, and multi-member LLCs generally need one. A single-member LLC without employees or excise tax obligations may not need one for federal income tax, but banks often ask for it. Many sole proprietors get an EIN anyway so they can give clients a number other than their Social Security number. The EIN is free and can be applied for online through IRS.gov.

- [ ] EIN requirement checked on IRS.gov

- [ ] EIN obtained directly from the IRS, not a paid site

- [ ] EIN confirmation letter saved

Step 6: Check licences and permits

Online businesses are not exempt from licensing. Depending on your state, county and city, you may need a general business licence, a home occupation permit or a seller's permit. Some products, such as food, cosmetics, alcohol or children's goods, carry extra federal or state rules. The SBA business guide links to state resources for licences and permits.

- [ ] State licence requirements checked

- [ ] City or county licence checked

- [ ] Home business rules checked

- [ ] Product-specific rules checked

Step 7: Register for sales tax where required

Sales tax is set at state and local level. Since the 2018 Supreme Court decision in South Dakota v. Wayfair, states can require remote sellers to collect sales tax once they pass an economic threshold in that state, often set by sales value or number of transactions. Many states also have marketplace facilitator laws, under which large marketplaces collect and remit tax on sales made through their platforms. If you sell through your own website, you are generally responsible for registering and collecting tax in states where you have obligations.

- [ ] Home state sales tax registration checked

- [ ] Other states' thresholds reviewed

- [ ] Marketplace facilitator coverage confirmed

Step 8: Open a business bank account

Keeping business money separate from personal money makes taxes and record keeping easier, and for LLCs it helps support liability protection. Banks usually ask for formation documents, an EIN or SSN and any DBA certificate.

- [ ] Business checking account opened

- [ ] Payment processor linked to the business account

Step 9: Set up records and taxes

Track income, expenses and receipts from day one. Sole proprietors and single-member LLC owners usually report business income on Schedule C and may owe self-employment tax. The IRS Self-Employed Individuals Tax Center explains estimated quarterly payments.

Worked example: an online seller expects $12,000 of net profit in a year. Self-employment tax is calculated on 92.35% of net earnings, which is $11,082, at 15.3%, giving about $1,696 before income tax. Use the percentage calculator on this site to test other amounts. This is an illustration, not tax advice.

- [ ] Bookkeeping method chosen

- [ ] Receipts stored digitally

- [ ] Quarterly tax dates added to calendar

Watch out for registration scams

New business owners often receive official-looking letters or emails offering to file annual reports, provide certificates of good standing or obtain an EIN for a fee. Many are not from government agencies. Check the sender, file directly with your state or the IRS and never pay a third party for something the government provides free unless you chose that service yourself.

Beneficial ownership reporting

In March 2025, FinCEN issued an interim final rule that exempted US-formed companies and US persons from beneficial ownership information reporting under the Corporate Transparency Act. Rules in this area have changed several times, so check FinCEN's website for the current position.

Step 10: Review website and marketing rules

An online business also needs to follow rules about how it sells. The Federal Trade Commission enforces laws on truthful advertising, endorsements and online reviews, and requires clear disclosure when influencers or affiliates are paid to promote products. If you collect customer data, publish a privacy policy that explains what you collect and how you use it, and check whether state privacy laws apply to you. Clear refund, shipping and contact information helps customers trust a new store and reduces disputes with payment processors.

Step 11: Consider insurance

Business insurance is not always required, but it can protect you from claims. Product liability insurance matters if you sell physical goods, while professional liability insurance can help freelancers who give advice or create work for clients. Home insurance policies often exclude business activity, so ask your insurer whether stock or equipment kept at home is covered.

Example: two sellers, two paths

Maria sells handmade candles from home under her own name. She operates as a sole proprietor, checks her city's home occupation rules, registers with her state for sales tax and gets an EIN to keep her Social Security number off forms. She files a DBA when she starts trading as Glow Studio.

Devon plans to sell imported fitness equipment from his own website, with higher product liability risk. He forms an LLC with his state, names a registered agent, gets an EIN, buys product liability insurance and registers for sales tax in his home state. He reviews thresholds in other states every quarter as sales grow.

Keeping registrations current

Registration is not a one-time task. LLCs and corporations usually file annual or biennial reports, licences may need renewal, and you must update records if you move or change your business name. Missing a state filing can lead to penalties or loss of good standing. Keep a list of every registration, its renewal date and the agency responsible.

Questions from readers

Have a question about starting a business? Send it through the Ask page on this site.

Disclaimer

This checklist is general information based on SBA, IRS and FinCEN sources at the time of writing. Requirements vary by state and change over time. It is not legal, tax or financial advice.

💬 Join the discussion on this article →

More in Jobs · Trending News · Browse local deals