The importance of registering a business

Register word with lightbulb

Feb. 23, 2022 – DENTON – There is nothing more exciting than starting your own business. When it is time to open a business bank account or apply for business loans or other funding, it is important that proof of ownership exists and that you are actually operating a business.

Registering your business, even as a sole proprietor or gig worker by filing a Doing Business As (DBA) at you County Clerk’s office can help. A DBA will show that an individual has established a name for their business and has made it a public record. Many banks require at least two things to prove you are operating as a business before they will open a business checking account. It is always best to have a separate account for your business and not comingle with your personal checking account.

While a sole proprietor is able to file taxes under a social security number, a LLC, corporation or partnership can file for an Employer Identification Number (EIN) as an identification for the business entity. The Internal Revenue Service offers these free through their website, and it requires the name and identification of the true principal officer, general partner or owner of a business. The EIN is issued for the purpose of tax administration, and you can print one out immediately.

If a business sells tangible items, sells or leases tangible personal property or sells taxable services in Texas, a sales and use tax permit filing with the Texas Comptroller is required. You will need to collect sales tax for the taxable items you sell. This certificate will also allow your business to purchase items at discounted or wholesale prices from vendors and to purchase items for resale without paying taxes on them. Many ask for these permits if a business is selling taxable items at shows, festivals or a farmers market.

Other advantages of business registration:

  • Legitimization of the business can help establish a good reputation with clients or customers. They will want to know that you a running a business with required licensing and permits.
  • It is easier to hire employees when they know they are working for an established business. Candidates want to know that they are working for an actual business.
  • Protect your business name by registering it. If your business name is not registered, someone else can take it and register it. The state it is registered in will not allow two businesses to have the same name in that state.
  • Avoid being caught for not running your business legitimately, or risk being shut down.

Peace of mind can come when you know that your business is properly set up. Registration shows that you are serious about your business and offered some protection by doing so.

Tracy Irby is the director for the Center for Women Entrepreneurs at Texas Woman’s University. She can be reached at The center is part of the Jane Nelson Institute for Women’s Leadership, which is dedicated to preparing more women to take on successful roles in business and public service.

Article first published in the Denton Record-Chronicle.

Page last updated 12:51 PM, March 3, 2022