When to File for a Business License?
The kind of business license you need depends on two elements: type of business and location. In some states, you will need a license to be a ferret breeder or palm reader. In fact, you may need several different licenses, permits and other certifications to be in compliance with local, state and federal regulations.
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Local, State and Federal Licenses
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After completing your education, you may need to pass a state board of certification test to earn your license before you can pursue many careers. Licensing will be your first order of business. Appraisers, architects, chiropractors, dentists, electricians, pharmacists, physicians, real estate brokers, veterinarians or private investigators are among the many occupations that require a professional license. According to S. David Young, professor of accounting and control at the European Institute of Business Administration (INSEAD), there are nearly 500 careers across the United States that require an occupational license.
Local Licensing and Registering Your Business Name or DBA
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Beyond professional licensing, check with your local city clerk to see if any other license or permit is needed to operate your business. Some locations may require a zoning permit before you can open a business. The clerk will also be able to tell you where and how you can file a "Doing Business As" (DBA) form. Your DBA will give you the right to operate under a business name. To protect your business' identity and good will, you may also want to consider applying for a trademark with the U.S. Patents and Trademark Office.
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Employer Identification Number
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If you operate your business as a corporation or partnership, you have employees, withhold taxes on income, or have a Keogh plan, you will have to apply for an employer identification number (EIN) with the Internal Revenue Service. You should do this after you have decided the form of ownership and your business name. The EIN is like a social security number for your business. There is no fee for applying for an EIN and you can do it online with the IRS.
Seller's Permits or Tax License
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A "certificate of resale" or "certificate of authority" are all terms for a seller's permit, which allows you to collect sales tax from your customers. If you are selling products, you will need a seller's permit along with other state and city sales licenses. Again, this should be acquired after you settle on your business name. The percentage of sales tax that is collected is determined by the state, county and local municipalities. Sellers permits are usually issued through state's state sales tax commission, the board of equalization or a franchise tax board.
Start With a Good Business Plan
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Any business endeavor should start with a well-conceived business plan. If you have the education to pursue a particular business, then you should have clear understanding of how your business will work. Now is the time to focus on the details, who will be involved and how it will all come together so that you can determine the feasibility of your plan. Upon completion of the business plan you can begin the application process for the appropriate business licenses and permits.
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