Session 6: Licenses and permits

Session 6: Licenses and permits
Licenses and permits
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Do I need any licenses?
The answer is most likely "yes". Without this, you may be conducting business illegally. Just about all businesses need a county or city license. There may be local, county, state, and or federal licensing requirements, depending on the type of business you select. The fees associated with getting a license are typically minimal, if any.

Local Licenses and Permits:
Your local licensing requirements can and will vary. Some examples of these variations are the following:
You may need a zoning compliance permit before you can open for business. Make sure the space you own or lease is properly zoned for the specific type of business you select.
You may need a special license if you�re conducting business out of your house, a beauty salon for example.
Are you planning on remodeling your space? You may need to get a permit, so you will want to check the building codes first.
John Powers
Attorney-at-Law

You're the former mayor of La Habra Heights in California. Do you have any comments on what issues a starting business person needs to check out at city hall?
State Licenses and Permits:
There are certain businesses and professions that require a state license. State licenses are often required for the following occupations:
accountants
appraisers
auctioneers
barbers
bill collectors
building contractors
cosmetologists
private security guards
private investigators
real estate agents

Where do I go to get a license?
The best place to start is your local city hall or courthouse. See the city clerk, who should be able to direct you. You can also phone the city or county clerk's office with questions, or look in your local phone book under municipal government offices. Try a search online for "Your city hall" on Google or Yahoo local searches to find the Web site for your local city hall.

How about working from home?
Investigate local zoning ordinances covering home based businesses. Some residential neighborhoods have strict zoning restrictions that may prevent you from doing business out of your home. Yet, it may be possible to get a variance or conditional-use permit. In many areas, attitudes toward home based businesses are becoming more supportive, making it easier to obtain a variance. Condominiums and planned communities may have bylaws that could affect your ability to do business out of your home.

anking Under Your Business Name
The vast majority of banks will not allow you to open a bank account unless you have shown them proof of a filed DBA. It is important to have a business bank account so that you can accept payments written out to your company name. You may consider checking with different banks to see the differences in services they will offer you and the requirements they have to set up a business account.

Should I Trademark My Business Name?
You are not required by law to do this but registering your name as a trademark is always a good idea. It provides you with protection in case another business tries to use your business name or a name that is likely to be confused with your business name. It may be smart to file an application for a federal trademark if your company is doing business in several states. Run a search with the government or through a service to determine if your name is taken


What is a seller's permit?
Sometimes a seller's permit is called a "certificate of resale" or a "certificate of authority." This permit lets you collect sales tax from your customers, which you in turn pay to the state. Keep in mind that a seller's permit is different from a business license. Are you engaging in retail sales? If the answer is "yes", then you probably need to register for and get a sales tax license or a seller's permit. You still would need this permit if you are also selling goods that are exempt from state sales tax. If you are selling both products and services, it is important you keep sales organized separately. Sales of services are not usually taxed in most states. Sales tax is imposed at the retail level and will vary depending on your state.



What is the importance of an EIN?
An Employer Identification Number (EIN), also known as a federal tax ID, is similar to a social security number for your business. This nine-digit number is important because it allows you to identify your business on important government forms and official documents. Oftentimes, wholesale distributors require either a federal tax ID or a seller's permit from a retailer.

Do I need an EIN?
You are required to have an EIN in some, but not all circumstances. We recommend you get an EIN instead of using your social security number. It is safer to give out your EIN than it is to give out your personal social security number. There is no fee for receiving this from the IRS. A benefit to having an EIN is that it can help you establish credibility with whom you do business.

An EIN is required if

Your business has employees.
Your business is a Corporation or a Partnership.
You file any of these tax returns: Employment, Excise or Alcohol, Tobacco and Firearms.
You withhold taxes on income, other than wages, paid to a nonresident alien.
You have a Keogh plan.
You are involved with: trusts, IRAs, exempt organization business income tax returns, estates, real estate mortgage investment conduits, nonprofit organizations, farmers' cooperatives or plan administrators.