Many different elements go into starting a new business. One of the primary requirements for setting up a business is to abide by the legal requirements set by federal, state and county rules and regulations. Abiding by these rules allows you to start your business off on the right path to help you avoid legal issues regarding the business structure in the future.
Register the Business
When setting up a business, your first job is to decide which business structure is best for you: sole proprietor, corporation, limited liability company or a partnership. The business structure you choose dictates the paperwork you have to file with the state secretary’s office where the business operates, but you first have to register your business and name with the state secretary’s office.
State Business License
You must check with your state secretary’s office to see if the state requires you to carry a state business license; some states require a business license while other states do not. Texas, for example, does not require a business to carry a state license, but the state does regulate businesses involved in financial services, insurance, real estate, massage therapy, tax consulting services, child or elder care, and barbers and hair stylists.
Local Business License
Counties and other localities generally require businesses to obtain a license to operate within their confines. The county clerk’s office where you set up the business provides guidance about the type of license you need to establish and run your business.
Federal Business License
A federal business license is not a common type of license for a business to have to obtain. Federal business licenses are required only if your business involves the sale of alcohol, tobacco or firearms; prescription drug manufacturing; or providing investment advice.
Federal Employer ID Number
The Internal Revenue Service requires businesses, especially those with employees, to obtain an employer identification number. An EIN is the business equivalent of a social security number for an individual. The business uses the EIN for filing taxes and more. Obtain an EIN by completing and submitting Form SS-4 to the IRS.
Sales and Use Tax Permit
If your business involves selling taxable product or services, most states also require you to obtain a sales and use tax permit. Texas requires corporations, partnerships or limited liability companies to hold a Texas sales and use tax permit. Other state laws vary, so check with the Department of Revenue for your state for the requirements.
Other types of business permits may be requirements. These permits normally include a seller’s permit for reselling wholesale merchandise, a health permit for food preparation businesses and a zoning permit for a home-based business.
Source : Smallbusiness.chron.com