Most states and many cities and/or counties impose licenses and permits on a wide variety of businesses. The operation of your business will most likely require such a tax.
State Requirements
While business licensing requirements vary from state to state, some of the more common types are listed below.
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.
Employer Identification Number (EIN)
With the exception of sole proprietors, most business types must apply for an EIN regardless of whether they have employees. Visit the IRS site to
find out if you need an EIN, and if so, whether you are eligible to apply through the IRS'
online application.
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:
For more compliance information, visit www.business.gov
Employer ID Numbers (EINs)
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number, and is used to identify a business entity. Generally, businesses need an EIN. You may apply for an EIN in various ways, and now you may apply online. This is a free service offered by the Internal Revenue Service. You must check with your state to make sure you need a state number or charter.
Note: You may not transfer your EIN if you sell or otherwise transfer your business. The new business owner and operator may not use your EIN.
*Courtesy Small Business Administration
