New Business Basics: Common State Licenses You Might Need

If you're setting up a new business, it pays to get the basics right before you begin. There are several common state licenses you might need, and ensuring they are in place means you can get on with running your business without worrying about being fined for noncompliance with local laws.

Checking zoning laws and permits

Regardless of whether you want to start a home-based business or take on a commercial space, one of the first things to check is whether the type of business you want to run is allowed to operate in your preferred location. Check with your local government office to ensure that your business is acceptable, and obtain any necessary zoning permits. You may also need building permits, health permits and even specific permits to erect signs and install alarms.

Ensure that you have a tax ID number

If you are setting up as a sole proprietor, you may be able to use your Social Security number as your tax ID number. If you are setting up a partnership or limited company, however, you will need to get an Employee Identification Number (EIN) from the IRS.

Obtain state tax permits

You might not need a sales-tax permit if your customers are not the end user. If you sell directly to the public, though, or sell a business product or service, you should check whether you need to collect sales tax and obtain any necessary permits. You may also need permits to withhold income tax from employees.

File a Fictitious Name Statement (DBA)

If you are trading under any name other than your own, you may need to file a Fictitious Name Statement (Doing Business As, or DBA) with your local state or city office, as well as your bank. If you are trading as a corporation, partnership or limited liability company, you will need to register your business entity.

Additional occupational or business licenses

You will almost certainly need a general business license, and depending on the type of business, you may need several other specific licenses or permits. Also, check to see what insurance you are required to carry and whether you need to file any paperwork or get permits before taking on employees.

The Small Business Administration can help you identify the licenses and permits you will need in your given location.

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