Legal Requirements For Your Business Organization
are federal, state, local and, in some cases, regional
requirements that may apply to your business. You're wise
to thoroughly research this issue before starting your
business, not only because you're a good citizen who wants
to be in compliance but also because you want to prevent
any costly surprises that might impact you adversely now
or in the near future. Sometimes what you don't know can
hurt you and your wallet.
At the federal level, your business will most likely need
a license or permit if you're engaged in one of the following:
dispensing investment advice; providing transportation
services such as a trucking company; preparing food products;
producing drugs; manufacturing tobacco, alcohol or firearms;
or if you own a radio or TV station. If you're involved
in any of the activities mentioned above, you can obtain
government requirements by contacting the appropriate
federal agency such as the securities and exchange commission,
the interstate commerce commission and so on. Your trade
or professional association should be able to assist you
in determining if there are any federal agencies that
have oversight for your type of business. You can obtain
contact information for a trade or professional association
by examining the Encyclopedia of Associations at your
at the federal level are two tax registrations. Form SS-4
is used to apply for an employer identification number.
The only businesses that don't need this number are sole
proprietors with no employees. Otherwise, this number
is required for reporting withholding taxes. Unless you're
a sole proprietor with no employees, you can't report
withholding under your personal social security number.
The second registration applies only to those businesses
that want "S" corporation status. To do so,
fill out and send Form 2553 to the IRS.
you employ workers, you must ensure that they fill out
I-9 and W-4 forms. The former proves an employee's citizenship,
and the latter provides necessary withholding information
on the employee.
States license professionals such as CPAs, attorneys,
nurses, doctors, dentists, architects, engineers and others.
your state collects state income tax, you'll have to file
an application to obtain a withholding number similar
to filing for a federal identification number. You can
obtain an application from your state's department of
revenue or treasury department.
you're selling a product, you'll also need a sales tax
number to use in reporting the sales tax collected and
remitted to the state. This form can also be obtained
from your state's department of revenue or treasury department.
you're an employer, you'll have to register with your
state's department of labor to obtain a number to use
in reporting unemployment compensation paid into an account
on behalf of employees for possible compensation in the
event of job loss. You'll also need to make sure they
complete a state income tax withholding form similar to
the W-4 form for federal withholding.
states require a basic business license for those who
operate a business, even if it operates out of a home
rather than a commercial location, and certain types of
businesses may need special licensing as well if they
serve food or alcohol, sell gasoline or operate a swimming
pool, nursing home and so on.
Local governments may impose licensing or permit requirements
for businesses that impact community health or the environment.
They may also require that your business comply with building
codes and zoning ordinances. It may also be necessary
for you to pay local property taxes.
puzzled? Check with any qualified lawyer from our website,
your local Small Business Development Center, a local
CPA who works with start-up businesses or the local office
of one of the national payroll companies that provide
help to start-up companies with one or more employees.