When a new business is started a business license is required to conduct daily operations. The license may be required at the local level or at the state level. The type of license required depends on the regulations of the local and state government. Regardless, the first order of business is to register the name with the county or state be it a DBA for a sole proprietorship or a corporation. In addition if the business is not a sole proprietorship run under the business owners social security number then a tax identification or employer identification number must be obtained from the IRS. Once the name is legally registered and the TIN/EIN is received, a license can be obtained.
Getting a Local License
To begin, make sure all the necessary paperwork is in order such as a fictitious name filing and the TIN/EIN. Other documents may be required depending on the type of business. For example, for an LLC Articles of Organization or an Operating Agreement might be required. It is best to check with your local government for what is needed before applying for the license.
The next step is to fill out all applicable paperwork. Return the paperwork to city hall with the appropriate fee. If possible, pay the fee with a business check so there is a record of the payment for tax purposes. If the business checking account has not be opened be sure to get a receipt of payment for business records.
Keeping the Local License
Once the license has been received check with the local government regarding business regulations. One of the requirements to obtaining and keeping the business license might be yearly renewal and a renewal fee. If this is not done annually the business license could be revoked.
Getting a State License
If the business is under state regulation a state business license will be required. For example, some businesses needing state licenses include a realtor, hairdresser, doctor, auto mechanic or a lawyer. Usually a required training course is a necessity to get this business license. To get a state license fill out and file the appropriate paperwork and pay the state filing fee with a business check if possible. Make sure the business renews its license annually and completes in additional training courses required by the state.
Sales Tax Business License
While business licenses might be optional in some state, a sales tax license is always required. This license allows the business owner to charge sales tax to its customers. The local State Franchise Board will let the business owner know what is required.
The new business owner will typically choose a name for the busy that clearly states what the business does and is memorable to its customers. Once the name is chosen it must be filed as a DBA with the local government. The trick is to fill out the DBA forms correctly the first time
Specify the Entity
The first line on the DBA form specifies if this is a new filing or a renewal of an existing business. To let the county know what type of business this is, the second line provides a few choices: “I Am” for a sole proprietor, “We Are” for a partnership and “It Is’ for a corporation on other legal entity. As sole owner of the business, circle the choice, “I Am” to indicate this business is a DBA/sole proprietorship.
The next few lines on the DBA form require some basic business information. First the type of business must be declared. On the next lines the business address is added. Finally the chosen business name is included.
The next section of the DBA form requires the business owners’ personal information. If the business is a sole proprietor or partnership then the name of the owner or owners and their respective addresses are entered into this section. If the business is a corporation or LLC then all the names of the owners and their addresses must be included in this section.
Double check to be sure the form has been filled out correctly. If so, the DBA from must now be notarized. A notary can usually be found at a bank, an attorney’s office or a government office. The notary might charge a small fee for the service. Be sure the DBA form is never be signed and dated unless a notary is present.
Once the DBA form is signed and notarized it should be delivered to the correct county or state office for filing. Be sure to bring a business check to pay for the DBA filing. Many filing offices will not accept cash or charge. And if possible use a business check for the payment for tax purposes.
If a mistake has been made on the DBA filing form it is best to fill out a new DBA form instead of trying to correct the mistake. In addition the DBA should be filed before the business owner request a tax identification or employer identification number. Finally to save time, complete a business name search prior to gong down to the clerk’s office to fill out and file the DBA. If the name has already been taken a new name will have to be determined and this is best to do well in advance.