While there are issues about permits, business names and licenses that can be handled alone, some business masters are still best left in the hands of a lawyer.
A business license is a permit issued by government agencies that enable companies and individuals conduct business within their jurisdiction. It is a form of authorization from the government that will allow individuals to start a business. Depending on your business type, you may need a county, local, state or federal license.
Local, State, & Federal Licenses/Permits
Local licensing requirements vary from state to state. You may also need a zoning compliance before you can start a business. Remodeling your business space may also need a permit. There are professions and businesses that may require a state license such as realtors, private investigators, barbers, bill collectors, cosmetologists, building contractors, accountants, appraisers, auctioneers and private security. The state may also require special licenses for selling products like lottery tickets, liquor, gasoline, firearms and etc.
Federal licensing is also required for specialized businesses like drug manufacturing, broadcasting, ground transport, meat product preparation, investment consulting and the production of alcohol, firearms or tobacco.
Ask your local courthouse or city hall on the process of getting licenses and permits. You can also give your city clerk a phone call or find the city’s website online. If you are working from home, make sure you know the local zoning ordinances that cover home based businesses. There are residential neighborhoods that have very strict zoning restrictions that may prevent you from establishing a home based business. Planned communities and condominiums may have their own bylaws that will affect your ability to do business at home.
The Seller’s Permit
Also called as a certificate of authority or a certificate of resale, a seller’s permit enables you to collect sales tax from customers, which you have to remit to the state. This permit is different from that of a business license. If you are in the retail business, then a seller’s permit is a must. If you are both offering services and products, make sure you organized sales separately. Service sales are not taxed in many states. Register for a seller’s permit through the Franchise Tax Board, Sales Tax Commission or the Board of Equalization.
Employer Identification Number or EIN
Also called as the federal tax ID, the Employer Identification Number is more like a social security number for your business. This 9-digit number is important because it identifies your business on government documents and forms. Wholesale distributors usually need seller’s permit or EIN. When do you need EIN? Here are situations that will require a federal tax ID number.
- You have employees
- Your business is a partnership or corporation
- You file tax returns like Excise or Alcohol, Employment, Firearms and Tobacco
- You currently have a Keogh plan
- You are involved with IRAs, trusts, real estate investment conduits, estates, plan administrators and farmers’ cooperatives.
You can apply for an EIN through the IRS website. Today, you can now apply by fax, mail, phone or online. You may also need a tax identification number from your state department for revenue and taxation.