Attorneys, Licenses, Permits

Chapter 4: Starting a Business - Page 4.5

Find an Attorney

I'm not an attorney, and I don't give legal advice. I do strongly recommend working with an attorney to go through the details of your company's legal establishment, licenses, and other items covered here. By including this information in this book, I don't mean to imply you should do it yourself.

The trade-offs involved in incorporation vs. partnership vs. other forms of business are significant. Small problems developed at the early stages of a new business can become horrendous problems later on. What's true in one state isn't true in the next one. The cost of simple legal advice in this regard is almost always worth it. Starting a company should not involve a major legal bill except in special cases. Don't skimp on legal costs.

Licenses and Permits are Usually Local Issues

It's hard to generalize on licenses and permits, because some of these depend on where you are and some depend on what you do. When in doubt, you should check with local sources. If you don't want to go straight to the local government and ask your questions directly, then ask at your local Chamber of Commerce or Small Business Development Center (SBDC) .

For example, many cities have zoning laws that define where you can put retail stores, office space, and industries. Few of these affect the small home-based business, but it's not unusual to have zoning laws prohibit signs on lawns or houses.

Some types of businesses require local or state licenses. This depends on where you are. For example, businesses including day care, hair care, food service, and bars and nightclubs often require special licenses.

Resale Licenses and Sales Taxes

In states that have sales tax, state authorities manage a system that sets reseller businesses into a special category so they don't have to pay sales taxes on items they buy for resale. The required paperwork and the state offices that manage it are different in many states, so you'll have to ask state offices for your state's rules as you establish your business.

Taxpayer ID and Employer Numbers

Employer Identification Numbers (EIN) are assigned by the Internal Revenue Service and state tax authorities. If you don't have employees and you haven't established a corporation, then your social security number is your federal taxpayer ID. If you've established a corporation or you have employees, then you must have a federal EIN, which is assigned by the federal IRS. In most states, the state assigns a separate state number.

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