If you’re looking to start your own business, first things first. Starting your own business is a huge step and a great way to live your life – in control of your finances, future and freedom. Once you’ve done your planning, figured out what type of business you’re going to open and how you’re going to do, make sure you have all of the licenses and permits needed in order to stay out of trouble with local, state, and federal agencies.
Essentially, you can divide your required licenses and permits into two categories:
* Must have
* Might need to have.
Must Have
# EIN
You must have an EIN or a tax identification number. This is acquired by visiting the IRS website and filling out a form. If you’re going to be reporting income under your social security number, then you don’t necessarily need an EIN; however, most of the time it pays to have one and report your business income separately. It also protects your identity, so you are not sending out invoices with your SSN on them.
# Register with the state
You will also need to register your business with your state. Each state has their own process for this, but you can likely find all the information you need if you visit your local state government website and look up how to start an LLC, Limited Liability Company. This will protect you in the event that anyone ever tries to sue you and also gives you tax advantages as a business owner rather than an individual.
But what about all those “might need to haves?”
Might Need To Have
This depends in large part on what your business is, where you live and where you’re doing business. If you’re a massage therapist, for example, and you’re doing business in your home, you may need different permits than you would if you were working in a clinic with other therapists.
If you’re selling a physical product, you’ll need to obtain a sales tax license. If you’re manufacturing anything, you may need zoning permits to do this – whether you’re in your home or a commercial space.
Here are some of the business licenses and permits you might need to have:
# Occupational and professional licenses
These are issued by the state and are specific to certain industries. For example, if you’re offering tax services, legal services, medical care, or some consulting services, you may need an occupational or professional license. Nutritionists, for example, are required by some states to be licensed, while other states don’t require it. Other industries like barbers, real estate agents, auctioneers, private investigators, private security guards, funeral directors, bill collectors, and cosmetologists also require licensing.
# Federal licenses
Certain industries require federal licensing. For example, investment advisors need to be licensed by the SEC. And if you’re selling tobacco, alcohol or guns, you need to be licensed by the U.S. Bureau of Alcohol, Tobacco, and Firearms.
# Employer Registration
If you’re planning on hiring anyone, you’ll need to contact your state Department of Revenue because you’ll need to pay unemployment insurance.
Most of the time, obtaining the proper licenses, registrations and permits is a straightforward process and the majority of it, if not all of it, can be accomplished online. To find out what licenses and permits your business needs, visit your local small business association and/or your local government website to learn more.
Further Reading
