Start your business off on the proper foot by learning what’s required of your business.
There are federal, state, local and, in some instances, regional requirements that may connect with your business. You’re smart to thoroughly research this problem prior to starting your business, not merely because you’re an excellent citizen who would like to maintain compliance but also because you need to prevent any costly surprises that may impact you adversely now or soon. Sometimes what you have no idea can hurt you as well as your wallet.
Federal Requirements At the federal level, your business will likely need a license or permit if you are engaged in among the following: dispensing investment advice; providing transportation services like a trucking company; preparing foods; producing drugs; manufacturing tobacco, alcohol or firearms; or in the event that you own a radio or TV station. If you are involved in the activities mentioned previously, you can buy government requirements by contacting the correct federal agency like the securities and exchange commission, the interstate commerce commission and so forth. Your trade or professional association will be able to help you in determining if there are any federal agencies which have oversight for your kind of business. You can buy contact information for a trade or professional association by examining the Encyclopedia of Associations at try your local library.
Also at the federal level are two tax registrations. Form SS-4 can be used to use for an employer identification number. The only businesses that don’t need this number are sole proprietors without employees. Otherwise, this number is necessary for reporting withholding taxes. Unless you’re a sole proprietor without employees, you can’t report withholding under your individual social security number. The next registration applies and then those businesses that are looking "S" corporation status. To take action, complete and send Form 2553 to the IRS.
In the event that you employ workers, you need to ensure that they complete I-9 and W-4 forms. The former proves an employee’s citizenship, and the latter provides necessary withholding information on the employee.
State Requirements States license professionals such as for example CPAs, attorneys, nurses, doctors, dentists, architects, engineers and others.
If a state collects state tax, you need to file an application to secure a withholding number similar to filing for a federal identification number. You can buy an application from your own state’s department of revenue or treasury department.
If you are selling a product, you will also need a sales tax number to use in reporting the sales tax collected and remitted to the state. This form may also be obtained from your own state’s department of revenue or treasury department.
If you are an employer, you need to register together with your state’s department of labor to secure a number to use in reporting unemployment compensation paid into a merchant account with respect to employees for possible compensation in case of job loss. You can also must make sure they complete circumstances tax withholding form like the W-4 form for federal withholding.
Many states need a basic business license for many who operate a business, even if it operates out of a home rather than commercial location, and certain types of businesses might need special licensing aswell if indeed they serve food or alcohol, sell gasoline or operate a pool, nursing home etc.
Local Requirements Local governments may impose licensing or permit requirements for businesses that impact community health or the surroundings. They may additionally require that your business adhere to building codes and zoning ordinances. It could also be essential for you to pay local property taxes.
Still puzzled? Consult with your local SMALL COMPANY Development Center, an area CPA who works together with start-up businesses or the neighborhood office of 1 of the national payroll companies offering help start-up companies with a number of employees.
Carlotta Roberts includes a J.D. degree from Atlanta Law School. Having worked in the regions of business organization, contracts and employer/employee relations, she’s been a consultant to small-business owners since 1981. She worked as an employee attorney concentrating in employment law issues before joining the tiny Business Development Center national network in 1986. Currently area director for the Kennesaw State University SMALL COMPANY Development Center near Atlanta, she’s developed two nationally recognized programs: The Cobb Micro Enterprise Council, which won the Vision 2000 award for small-business development in 1999, and the Franchise Institute, developed to supply assist with franchisees.
The opinions expressed in this column are those of the writer, not of Entrepreneur.com. All email address details are designed to be general in nature, without regard to specific geographical areas or circumstances, and really should only be relied upon after consulting a proper expert, such as a lawyer or accountant.