Starting a Business

When Do I Need a Business License?

I'm in the process of starting a small wood and toy shop in Maine. But as I am a sole proprietor, located more than 30 miles from a town but right on a major traffic throughfare, what would be considered the "threshold" for requiring a formal business license? The sales tax issue seems fairly clear under Maine law ($400 in revenue is the trigger). But the business permit issue isn't. Is there a set dollar amount of sales to be met? Is it a matter of sales tax accounts being acquired that are tied into the permit process? Or is it a legal formality? What else should I do?
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Whether or not you need a business license depends on your local and state laws although, generally, toy shops don't require specific business licenses. Your local town office will have more information about whether that is required, so your first step will be to contact them.

The www.Maine.gov website provides contact information for local municipalities in the state. That can be useful. Also be sure to ask about the zoning ordinances in your area -- if you anticipate walk-in customers, you might need to be sure that you are legally zoned for that kind of business traffic.

Again, your local town office should be able to steer you in the right direction.

Beyond that, you will want to consider how you will handle the issue of "liability." Your physical location or sales tax paid isn't so much the issue -- it's the nature of what you do and the products you create.

With that in mind, it might be wise to form a separate business entity and obtain insurance to cover products liability, among other things. Whether a corporation or limited liability company is the right form for you is a discussion you should have with a local business attorney and accountant to help you put the right foundation in place.

Related: Top 5 Mistakes in Forming Your Corporation
Related: Finding the Right Lawyer

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