.Before starting your business, you need to make sure that you have all the legal requirements needed to start and operate it. Keeping your business legal is very important and can have significant ramifications for your business. Getting all the licenses and permits will cost time and money, but not getting them will cost you even more (including the possibility of shutting down your business).
Licenses and permits needed vary in each country, state or municipality. Here is a general checklist of legal and regulatory matters that you need to get for your small business.
- Check the legal requirements in your state. Visit the official Department of State website as well as your local government to determine the legal and regulatory requirements your type of business will need. For important websites that you need to check pertinent to your state, go to the State by State Guide to Starting a Business
- Determine the legal structure of your business, whether you will form a sole proprietorship, incorporate, set up a Limited Liability Company or form a partnership. Visit Selecting the Legal Structure of Your Business
- Get an Employer Identification Number (EIN), especially if your business will operate as corporation or partnership. Visit the Internal Revenue Service website and apply for an EIN online.
- Check with your state’s Department of Revenue if a separate tax identification number is needed.
- Determine if you will need a basic business operation license (may be called “business tax certificate”) from the city or county in which your business will operate.
- Register your business name or fictitious business name permit (also called “dba” or “doing business as” permit; required for almost all types of businesses).
- If needed, get zoning approvaland land use permits, especially for new manufacturing businesses and certain home-based business operations. If you are running a home-based business, check first if you will need an approval from your Homeowner’s Association (HOA). Also be aware of what you are allowed to do and not — e.g. level of traffic from the business, number of delivery trucks that will come to your house due to the business, level of noise generated by the business, among others.
- Obtain occupational and health department permits, especially if your business involves the preparation and sale of food.
- Get Sales and Use permit (Sellers Permit) if you will be selling products and services.
- Get fire department permits, especially if your business is subject to annual inspection of the facility and if it will attract large numbers of customers (i.e. nightclubs and bars).
- Obtain special state-issued business license or permits, if your business will involve the sale of liquor, lottery tickets, gasoline, firearms
- Get state-issued occupational/professional licenses, if you and/or your employees will be offering a number of state-regulated services, such as day care, medical care, auto repair, insurance sales, cosmetology, legal representation, tax services, among others
- Obtain special federal business license or permits, if your business will involves investment advising (Securities & Exchange Commission), drug manufacturing (U.S. Food and Drug Administration), preparation of meat products (U.S. Food and Drug Administration), ground transportation such as trucking (U.S. Department of Transportation), manufacturing tobacco, alcohol, or firearms; or selling firearms (U.S. Bureau of Alcohol, Tobacco, and Firearms), among others