Licenses for setting up a startup
When you set up a business, you’ll need to deal with a variety of costs for which you haven’t plan. They are mostly about the government and the licenses and fees needed to be able to run a business legally.
It’s important to be aware of it and to make sure that you’re prepared for this expense. That’s the only way to deal with this mundane and complicated issues and start working on your business and make it profitable as soon as you can.
Business license
The first thing to consider is getting a business license because without it you can’t even practice your business in the first place. That’s what’s known as a general business license meaning that it allows you to have a company and to operate it in a particular city or state.
Some states and cities use this revenue to fund their business oriented operations. Others are more open to helping small businesses by asking them for less taxes and fees so they don’t have the fee for the license at all, even though you still have to obtain it for free. On average it costs about 100$.
Building permit
Another common type of permit is a permit allowing you to set up a building or to construct one. It’s also known as a construction permit in some places. The goal of this permit is also to obtain funds for the local government to deal with businesses but also to make sure that you’ll build the proper structure in accordance to safety and environmental protection rules.
This is a much more complicated license to get because it may take a long time for the government to make sure you’re building in a safe way. At the same time, it’s the costliest and it can be up to tens of thousands of dollars depending on the type of building.
Professional licenses
Unlike a business license which covers the right to work in any kind of profession, these professional licenses are more specific and they allow you to practice a particular profession. They are set up by local governments and sometimes they are rather simple, while in other cases you need to prove that you’re qualified to work in a particular profession.
At the same time, you’ll need to prove that you can do it in a safe way and in accordance to the law. The cost varies by profession and it can be from tens to thousands of dollars.
Doing business as
If you want your business to have a specific trademark other than the name of the company itself, you’ll need to obtain “doing business as” license. It needs to be done after your business is already founded since you need to have an official name before having a “doing business as”
Sometimes these are free and in other cases there’s a small fee up to a $100 and it’s especially useful if you have a business running more one type of operations at once.
Federal state and tax identification number
This is a number that will be used by the tax authorities to identify your business. It’s done because there are many businesses with the same or similar names out there and this will be a way to separate you from the rest. Sometimes all you need is the one number for the federal tax authorities and sometimes your state will have a separate number.
The number is obtained from the IRS simply by filling out a form and waiting for one to be assigned to you. There are other identifications you may want to get for your employees for instance.
Sales tax permit
If your company is in the sales business, you’ll need to obtain this tax permit so that you can start operating and be taxed on the income you make from sales. This is true if you’re selling online as well.
In some states, business permit also serves as a sales permit, but that’s not the case everywhere and you’ll need to check with your local authorities. You’ll need to have a tax identification number first because it’s needed to apply. There’s no fee.
Health permits
For some types of work, you’ll need to get a health permit proving that you’re healthy enough to work on a particular type of job. This is especially true in the food industry because that’s where you can harm others if you’re not healthy.
This is often a daunting task because you’ll need to wait for the test to come back and for the licensed doctors to prove you’re able to do your job. In many cases these permits need to be renewed periodically.
The licenses needed to run a business can often slow a company down, but in most cases they are necessary and serve a valuable purpose.
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