Keep It Legal
Although legal requirements vary geographically and by type ofbusiness, some of the most common start-up essentials include:
(1) Obtaining a federal Employer Identification Number(EIN). The EIN allows the federal government to keep track ofan employer's tax withholding amounts for employees and anyfunds paid to independent contractors. Although a sole proprietoris free to use his or her Social Security number instead, manybusiness forms require an EIN, so all business owners shouldconsider applying for one. To get one, simply file IRS FormSS-4.
(2) Applying for state and city business licenses.Contact the business license bureau in your city or county to findout what kind of business license, if any, you need to purchase.Also, check with any local or state agencies that may havejurisdiction over occupational licenses related to your type ofbusiness. Failure to obtain all necessary licenses and permits inadvance of opening day may result in significant fines or ultimatebusiness closure.
(3) Obtaining state sales tax and resale taxcertificates. If you will be selling goods directly to thepublic, you'll need a state sales tax certificate so that youcan submit sales tax payments to the state for every item you sell.If you will be buying raw materials wholesale from distributors, orwill be selling goods wholesale to shops and other distributors,you'll need a resale tax certificate so that no sales taxeswill be collected for such transactions. To obtain thesecertificates, or to find out if your particular business requiresone, contact the agency that is responsible for sales taxcollection in your state.
(4) Investigating zoning restrictions. Zoning laws mayaffect you when establishing your new business, especially if youlive in an urban setting or wish to operate your business legallyfrom home. Because zoning laws are typically used to protectneighborhoods from intrusive businesses, you need to investigateall applicable ordinances in your area before cementing plans forthe type of workplace you desire. In most areas, you should contactyour local city hall to learn about zoning laws in yourcommunity.
(5) Registering your business name. If you are includingyour full legal name as part of your selected business name, youcan skip this step in most states. However, if you will beconducting your business using a fictitious name (that is, anybusiness name that does not contain your full legal name as part ofit), you will be expected to file a DBA ("doing businessas"), also commonly known as a fictitious name statement. DBAsexist to inform the public that you are launching a business usinga name other than your own. Filing the DBA generally takes place atthe county clerk's office.
