Before opening a business, knowing which documents you need is important. Establishing a business and obtaining the necessary state and federal permits, licenses, and identification numbers is an integral part of the process if you want to prevent tax penalties or fines. Also, with the right documents, you’ll not receive an order to close your business.
In this article, we’ll go over the four essential documents you need to start a business in the U.S.
1. Business Entity Registration
As a business owner, you need to register your business first. There are different ways to register your business, and each one has tax and liability pros and cons; they include a corporation, partnership, limited liability company, or sole proprietorship. You can liaise with a tax advisor and a litigator, who will assist you in creating an organization while also ensuring you’re utilizing a practical design.
To register, you must file a business registration with the county registrar or the secretary of state. The registration usually requires the following:
- The business’s name and contact information
- The business’s type of entity
- The names of the business’s owners
- The business’s federal employer identification number (FEIN)
- The business’s registered agent
- The business’s principal place of business
2. Tax Identification Number
A partnership or a sole proprietorship organization usually uses the Social Security Number of the owners of the business as the TIN (tax identification number) for the company. For the limited liability companies and C-corporations, there is the need for a federal TIN (tax identification number), and it can be obtained by filing an SS-4 Form with the IRS.
Some states, such as Texas, require unemployment tax, sales, and franchise fees to be paid under the federal TIN with the secretary of state in Texas. The EIN is used to open a business bank account, apply for business licenses, and file business tax returns.
3. Business Permit
A business permit is required for different entities, including bars, restaurants, florists, or firearm sales. Most states have web portals, and you can search for the business permits required for a particular type of business and where you should file the correct forms.
You also need to have an already established business entity and obtain the TIN (Tax Identification Number) before you file for a business permit. The process of getting a business permit can be a bit complicated, and you may need to visit your local business permit office to get more information.
4. Business License
A business must have a proper license if it is going to operate legitimately. Licenses are required by the municipal, state, and federal governments. The types of licenses you require are based on the business you’re operating and the jurisdiction in which you’re working.
For the financial services sector, you must have federal and state registration. Also, the business and the sales force need to obtain a Securities & Exchange Commission license before conducting business.
You can reach out to the secretary of state, who will inform you about the licenses you need for your specific industry.
Besides requiring documents to start a business, there are tools that you’ll need. Tools such as an invoice maker will ensure that your business can run smoothly without any hurdles. Other than that, ensure that your business is legally registered.
To comply with all the requirements, seek the assistance of a tax advisor and a commercial litigator; these professionals will hear you out and assist you in setting up your business while ensuring you have all the documents you need.
Remember, if your business doesn’t have all the essential documents needed, you’re eligible for fines and in some cases, you’ll be forced to close down your business.
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