Starting a business can be one of the most exciting ventures on which to embark, and it’s always a good idea to make sure your business is operating legally. Believe it or not, many small businesses do not get the proper licensing, and as a result, may be at risk of legal ramifications.
Let’s take a look at some basic, common state licenses that you might need as a new business. Each state is different, and the best way to find out what your state requires is to contact the state directly.
If you operate a small business from home, and are selling products or services that require vendors and customers to come in and out of your home, you will probably need a zoning permit. Contact your local government office for details.
Sales tax permits
If you are selling a product directly to the public, you may be required to charge a sales tax. If you are selling to wholesalers, retailers or another source that operates as the middleman, collection of sales tax may not be necessary.
Fictitious Name Statement
If you are running an operation with a name, other than your own full name, you should register it. This usually involves filling out what’s called a fictitious name statement with your state or city office. If you’re running a partnership, once again, register and fill out the proper forms.
Occupational or business license
Most states require you to have an operational or business license. Besides the licensing requirements imposed by the state, some local city governments require certain types of businesses to be licensed at the local level. Once again, the best thing to do is to contact your city clerk or township officials for specific requirements. The following website provides information, state by state, where business licenses can be obtained: http://www.sba.gov/hotlist/license.html
Tax ID number
Some states allow you to use your social security number as your tax ID number, especially if you’re operating as an independent contractor. If you’re a partnership or corporation, then you need a different tax ID number. Contact the IRS for details. http://www.irs.gov/
Non Profit Status
In order to be considered not-for-profit or nonprofit, you must fill out IRS forms and paperwork. Your organization will also need to get an Employee Identification Number (EIN). You must apply for it and request a tax-exempt status from the IRS.
Who can provide you with answers?
There are several good sources that can provide a small business owner with lots of valuable information for free. The Small Business Administration is one. Your bank is another, as well as your local state and city offices. It’s also a good idea to hire an accountant and retain a lawyer, if necessary, to review important business documents.
Let’s not forget what a privilege it is to live in the information age and to own a computer. Using a good search engine, you, the small business owner, can surf the web and find all sorts of valuable information to help you with your new venture. From ideas on launching the small business, to guidance and direction on choosing insurance policies for your employees, great resources are available at your fingertips.
After getting all the proper licenses and permits, the small business is ready for operation. Be sure to ask your state, city, and county offices how long it will take from the time you fill out the forms to when you are officially legal to operate your business. From there, the sky is the limit!