Starting a business is an exciting time for most people, optimism in the air of setting up your inventory, designing retail your retail space and fantasizing about prospective clients. However, before you flip that store closed sign to open you may want to consider all the necessary processes and documentation needed to make sure your local compliance officer doesn’t rain on your parade.
The business license and sales tax registration process can be a daunting and tedious process for most companies; however, it is a mandated process that all business must comply with. When opening a business, it is best to know where your local and state compliance offices are, as this information may be very vital to you during this process.
When Should I Get My Business Registrations & Licenses?
Generally, the business license and sales tax registration process takes place before opening your doors, however, in some cases this process can happen shortly after opening. For the best results and chances to avoid penalties or fines for operating without the proper licenses it is highly recommended to begin the registration process prior to opening.
Obtaining a Sales and Use Tax License
Majority of sales tax registrations are administered at the state level, however, there are some exceptions to this rule. For more on these exceptions please see excerpt below for “Home Rule Self- Administered Localities”. Generally, each state prepares a questionnaire to determine what type of business you have, what products are sold, and Start date. These applications also require personal information from responsible persons and/or corporate officers. Some of these include but are not limited to.
- Full Name
- Home Address
- Home Phone
- Copy of Driver’s License
Most applications on average take 10-30 mins to complete and can be done by visiting the respective states online sales tax platform. For most states this process takes 7-10 business days before the official sales tax license is received in the mail.
Home Rule Self-Administered Localities
States such as the ones listed below have independent self-governing localities in which the taxation filings and registrations are not only held on the state-level but also are held on a county and city level.
When applying for sales tax in these states please be sure to file directly with the state for sales tax, but also with your local sales tax office. For best practices, new business should contact a sales tax specialist or appear in person to the respective city and county tax department offices.
Obtaining a Business License
The business licensing process, while similar to the sales tax process, requires in most cases much more participation from the business management. In general, business licensing are multi-level (state, federal, city, and countywide) and often requires multiple forms and documentation in order to complete. Some key documentation and figures needed for business licensing include but are not limited to;
- Owner Driver’s License/Passport
- List of officers, members, or owners
- Floor plan of retail/wholesale space
- Landlord information
- Expected Annual sales Amount
- Average Inventory on Hand
- Business start date
Determining all the necessary licenses your business needs is a very daunting task, for best practices consider hiring a consultant or visiting the local business licensing agency in person. For most businesses, excluding businesses that sell “special products or services” such as alcohol, firearms, tobacco, and live entertainment, the list below can be used as a general guideline for the most common licenses need to remain in compliance.
- General Business License
- Fictitious Name
- Occupancy Permit
- Building and Planning Permit
- Hazardous Waste/ Waste Disposal
- Weights & Measures
- Fire Alarm Permit
What Will This Cost Me?
While some localities have the luxury of being free to register, majority of localities require several fees in order to receive licenses. The most common fees are for initial licenses, followed up with an annual fee to renew the license. In other cases, the business license/business tax can be billed quarterly and fluctuate based on gross sales and/or inventory amounts for the quarter. Billing for these licenses are generally sent in the mail weeks before payment is due.
If you or your business needs any assistance determining if you need to register for Sales Tax or applying for a Sales Tax or a Business License please contact PM Business Advisors at firstname.lastname@example.org