Business Licenses

The licenses and permits you will need to operate your business vary widely depending on your location and type of business. However, there are a few items that will be necessary for nearly all new businesses.

Federal EIN

FEIN stands for Federal Employment Identification Number. Your company’s EIN will be used as an identifier on federal tax forms. If your business is going to have employees then you will need to obtain an EIN to use when reporting income to the government. While some business owners without employees have the option to file under their social security number, an EIN affords a business flexibility allowing it to set up retirement accounts and pay additional taxes, such as excise taxes. You’ll also use your EIN to do non-tax related taxes, such as set up business bank accounts, apply for credit or set up a smartphone plan.

Note that single member LLCs are disregarded for federal income tax purposes and may just use the member’s SSN in place of the EIN on federal income tax returns. However, an EIN may be necessary for other reasons as stated above.

State sellers permit

Depending on the type of business and the state in which it operates, it may be necessary to obtain a seller’s or resale permit. A seller’s permit is typically required for any business selling tangible goods or taxable services, unless they are specifically exempted by statute. A seller’s permit allows the state to identify those businesses that must pay sales tax.

Any specialized state licenses

Many areas of business require additional licenses in order to operate. For example, businesses such as car dealerships, establishments that sell liquor, real estate agents, cosmetologists, and many more require profession or business specific licenses in addition to a general business license. The types of business requiring additional licenses are set forth in statutes and regulations on a state-by-state and sometimes local basis.

Local registrations and permits

Along with the wide array of required permits and licenses at a state level, some businesses may need to register or obtain licensure at a local city or county-level as well. In order to determine if your business is required to register locally try calling the county or city clerk’s office or going to their website.

Information on Illinois business licenses:

http://www2.illinois.gov/business/Pages/default.aspx

Information on various required Minnesota business licenses:

http://mn.gov/elicense/az_indexes/licensebyname.jsp

Information on Wisconsin business licenses:

http://ww2.wisconsin.gov/state/license/app?COMMAND=gov.wi.state.cpp.license.command.LoadLicenseHome

For more tips on getting started with your business, download our guilde on "10 Legal Pointers to Starting Your Business."

Michael F. Brennan runs a virtual law office helping clients in Illinois, Wisconsin, and Minnesota launch and grow small businesses. He can be reached at michael.brennan@mfblegal.com with questions or comments, or check out his website at www.thevirtualattorney.com.

The information contained herein is intended for informational purposes only and is not legal advice, nor is it intended to create an attorney-client relationship. For specific legal advice regarding a specific legal issue please contact me or another attorney for assistance.