When an individual decides to start a business, usually a sole proprietor ship is formed. This is just a simple company with one business owner and usually no employees to start. In addition all business income is reported through the business owner’s personal taxes and the business owner assumes sole responsibility for paying those taxes. Of course paying business taxes, like personal income taxes is a federal law and requirement. There are a few other laws that should be followed for a sole proprietorship.
Any business, whether it is a corporation or a sole proprietor must file for a sales tax permit. This permit allows the business to sell items to the public at retail prices and charge a sales tax. The sales tax must be carefully recorded on each item sold. Usually quarter, the business is required to pay the sales tax to the state. If the sole proprietorship/DBA business fails to be pay the sales tax, or fails to file for a sellers permit and is caught, the owner will be required to pay all past due sales tax immediately to go to jail.
A DBA that is required to follow certain regulations based on the purpose of the business must register the business with the state. For example, an auto mechanic, manicurist, and lawyer are all required to register their businesses with the state. If a state-regulated business is caught without a state license serious fines can result.
Similar to state licenses, a federal license is required for those DBAs that are federally regulated. For example, cross-country trucking companies and firearm retailers are federally regulated. By law these business must apply for a federal license to conduct business. Failure to do so can mean hefty fines and possible jail time. And, as a DBA, the business owner bears sole responsibility for filing for this license or paying the consequences.
Other permits a DBA might be responsible for include a builder’s permit if the business owner plans on altering the place of business. If caught without this builder’s permit the city can shut down the construction and charge a fine for failure to get a permit. Another permit that is especially important to restaurants is a health permit. The health permit states the business is in compliance with all state health codes and is open to periodic inspection. Without the health permit the business can be shut down and the owner severely fined.
For the business owner who is not sure what permits are required there are a few agencies that can be contacted. The local SBA (small business administration) will know what licenses and permits are required. In addition the chamber of commerce can also provide a list of licenses and permits that are needed as well a business attorney.