Newly formed businesses must comply with all federal regulations, taxes and securities before they can legally begin operating. In addition, some cases require a specialized business license.
While none of these requirements are hard to complete or even time-consuming, what can be difficult is getting everything together without knowing what you are doing—comparable to putting together a jigsaw puzzle without knowing what it should look like.
Below are some of the required registrations and licenses that new businesses need to operate legally.
NOTE: Not all licenses will be applicable for each business, which is why it’s important to consult with a business law attorney.
Tax Registrations
For retail sales, you will need to register for a sales tax license or a seller’s permit. These let you collect sales tax from your customers. Typically, this permit is needed regardless of whether you’re taxable goods or not. For this reason, it is also important to keep your labor and goods sales separate.
Licenses for Regulated Businesses
Some businesses will require a federal license/permit if their business activity or product will be supervised by a federal agency. For example:
- Public transportation and trucking
- Investment advice
- Preparation of meat products or production of drugs
- Tobacco products, alcohol, and firearms
Environmental Regulations
There are many businesses subject to various environmental regulations. For example, if you’re opening an auto repair shop, you will have a variety of local, state and federal regulations in regards to waste disposal. Some locales have regulations for recycling, while some businesses may be subject to different land use laws at the local and state level.
Securities Registration
Businesses that start out as corporations, limited liability company (LLC) or a limited partnership may have owners who are not actively working in the business. If this is the case, it is possible that you will need to comply with federal securities laws.
Securities laws are in place to make sure that unscrupulous business owners do not treat investors unfairly. This is done by requiring businesses to register the sale of ownership with the federal Securities and Exchange Commission (SEC). Remember: this registration takes time and involves extra legal and accounting fees. Small corporations are typically able to skip the registration process due to securities exemptions. For example, SEC rules are not required for “private offerings”.
Starting a business is no small feat. It takes time, expertise and planning to bring a fledgling idea into a strong business. Here at MaxFilings, we can help you get your business off the ground. We invite you to check out our Knowledge Center to learn everything you need to know about incorporating a business along with other helpful information.