Get All Access for $5/mo

Keep It Legal

Although legal requirements vary geographically and by type ofbusiness, some of the most common start-up essentials include:

(1) Obtaining a federal Employer Identification Number(EIN). The EIN allows the federal government to keep track ofan employer's tax withholding amounts for employees and anyfunds paid to independent contractors. Although a sole proprietoris free to use his or her Social Security number instead, manybusiness forms require an EIN, so all business owners shouldconsider applying for one. To get one, simply file IRS FormSS-4.

(2) Applying for state and city business licenses.Contact the business license bureau in your city or county to findout what kind of business license, if any, you need to purchase.Also, check with any local or state agencies that may havejurisdiction over occupational licenses related to your type ofbusiness. Failure to obtain all necessary licenses and permits inadvance of opening day may result in significant fines or ultimatebusiness closure.

(3) Obtaining state sales tax and resale taxcertificates. If you will be selling goods directly to thepublic, you'll need a state sales tax certificate so that youcan submit sales tax payments to the state for every item you sell.If you will be buying raw materials wholesale from distributors, orwill be selling goods wholesale to shops and other distributors,you'll need a resale tax certificate so that no sales taxeswill be collected for such transactions. To obtain thesecertificates, or to find out if your particular business requiresone, contact the agency that is responsible for sales taxcollection in your state.

(4) Investigating zoning restrictions. Zoning laws mayaffect you when establishing your new business, especially if youlive in an urban setting or wish to operate your business legallyfrom home. Because zoning laws are typically used to protectneighborhoods from intrusive businesses, you need to investigateall applicable ordinances in your area before cementing plans forthe type of workplace you desire. In most areas, you should contactyour local city hall to learn about zoning laws in yourcommunity.

(5) Registering your business name. If you are includingyour full legal name as part of your selected business name, youcan skip this step in most states. However, if you will beconducting your business using a fictitious name (that is, anybusiness name that does not contain your full legal name as part ofit), you will be expected to file a DBA ("doing businessas"), also commonly known as a fictitious name statement. DBAsexist to inform the public that you are launching a business usinga name other than your own. Filing the DBA generally takes place atthe county clerk's office.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Side Hustle

The Side Hustle He Started in His College Apartment Turned Into a $70,000-a-Month Income Stream — Then Earned Nearly $2 Million Last Year

Kyle Morrand and his college roommates loved playing retro video games — and the pastime would help launch his career.

Marketing

5 SEO Hacks to Help You Rank Fast

Discover the best SEO hacks you can use to rank fast and avoid waiting for months to see results.

Starting a Business

Inside the Exclusive Private Club Devoted to Food, Wine and the Arts

Barrett Wissman breaks down the passions and partnerships behind his latest venture Domus Artium Reserve.

Business News

Elon Musk Threatens to Ban Employees from Using Apple Products, Says Will Lock Devices in 'Cages'

The Tesla founder sounded off on X following Apple's 2024 Worldwide Developer Conference on Monday.

Collaboration

Watch Out for These 5 Consequences of Too Much Collaboration

Beware of the collaboration trap! Too much collaboration causes overload, and well-intentioned efforts to have broad collaboration can backfire.

Science & Technology

Why We Shouldn't Fear AI in Education (and How to Use It Effectively)

Facing resistance to new technologies in the educational process is nothing new, and AI is no exception. Yet, this powerful tool is set to overcome these challenges and revolutionize education, preparing students and professionals for a future of unparalleled efficiency and personalized learning.