First Steps to Establishing Your New Business: Other Filings, Other States

Establishing a new business is more than just submitting some initial paperwork to register with the state. There are some other filings that you might need to take into consideration.

Do I need a business license or permit?

Business licenses and permits serve two purposes: (1) they help the government track your revenue and (2) they protect the public. Nearly every business requires a license or permit, but the specific type will depend on the nature and location of your new enterprise. If you provide professional services, you will likely need to have a professional license. If you engage in a federally regulated industry (such as the sale of alcohol or agriculture), you will need a federal license or permit for your activities. For a storefront, restaurant, or other commercial venture, you will need a permit to hang a sign, add outdoor seating, etc.

In addition, businesses that sell goods and/or services must obtain a sales tax license or permit. Other tax permits may be required for income tax withholding and unemployment insurance tax purposes.

Failure to acquire the proper licensing and permits for your company can result in hefty penalties and even the shutting down of your business. Note that sole proprietorships and home-based businesses are not exempt from these requirements.

Can I set up shop wherever I choose?

Before you open your physical location, you need to make sure that you are in compliance with local zoning and building ordinances. In addition to restrictions on where you may operate (commercial, industrial, agricultural vs. residential areas), you must ensure that you are in compliance with construction, building alterations, and sign ordinances. Additional permits may be required.

How do I protect my company name, logo, and products?

All businesses should strongly consider taking active steps to protect their intellectual property (IP) rights. In addition to registering your name with the state, you should consider securing copyright and trademark protection with the U.S. Patent and Trademark Office (USPTO) for any unique logo, slogans, and original works.

An attorney can also advise you on ways to ensure that you are not infringing on someone else’s IP.

What if I plan to do business in more than one state?

If you plan to do business in more than one state, you may be subject to reporting, taxes and fees in the other state(s). Typically states will look to whether or not your company: (1) Has a physical office in the state, (2) has employees in the state, (3) accepts orders in the state, or (4) executes contracts in that state. These criteria are not inclusive and decisions are generally made on a case-by-case basis.

Note that an alternative to “foreign qualification,” or formal registration of your business in another state, is to incorporate your business (or form an LCC) independently there.

In our next post, we will cover business taxes.

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