Licenses & Permits
With the many tasks involved in starting a business, it’s easy to overlook the important legal requirements associated with registrations, permits and licenses. In addition to the information listed here, you can seek help from your state’s chamber of commerce, a lawyer, or trade associations serving your business, profession or industry.
Federal Requirements
Employer Identification Number
With the exception of Sole Proprietors, all business types must apply for a Federal Employer Identification Number (FEIN)regardless of whether they have employees. Visit the IRS Web site to download the application form and instructions.
Licenses and Permits
Most businesses do not require a federal license or permit. However, if you are engaged in one of the following activities, you should contact the responsible federal agency to determine the requirements for doing business:
- Investment advising
- Drug manufacturing
- Preparation of meat products
- Broadcasting
- Ground transportation
- Selling alcohol, tobacco or firearms
Registering Intellectual Property
Federal registration of intellectual property, including patents, trademarks, trade names and copyright, provide business owners with exclusive use of intellectual property in the U.S. as well as in a large number of foreign countries. See the Intellectual Property section of this site for details.
Election of S Corporation Status
If your business is a corporation and you want to elect status as an S corporation, you need to file Form 2553 (Election by a Small Business Corporation). Read more about the possible merits and disadvantages of S corporations.
State Requirements
Business Licenses
A state business license is the main document required for tax purposes and conducting other basic business functions. Many states have established small business assistance agencies to help small businesses comply with state requirements.
Occupations and Professions
State licenses are frequently required for occupations as varied as building contractors, physicians, appraisers, accountants, barbers, real estate agents, auctioneers, private investigators, private security guards, funeral directors, bill collectors, and cosmetologists. Since you can't always guess which occupations and professions are licensed by your state, you should always check with your state licensing authorities.
Licenses Based on Products Sold
Some state licensing requirements are based on the product sold. For example, most states require special licenses to sell liquor, lottery tickets, gasoline or firearms. Contact your state licensing authorities to determine the licensing requirements of your business.
Tax Registration
If the state in which you operate has a state income tax, you'll have to register and obtain an employer identification number from your state Department of Revenue or Treasury Department. If you're engaging in retail sales, you will need to obtain a sales tax license.
Trade Name Registration
If your business will only be operated in your local community, registering your company name with the state may be sufficient.
Employer Registrations
If you have any employees, you'll probably be required to make unemployment insurance contributions. For more information, contact your state Department of Revenue or Department of Labor.
