Knowing what retail business licenses and permits your company needs can be very confusing when planning a new business. Each item requires time, energy, and paperwork (depending on the government office you're dealing with) to obtain the proper registrations.
As unpleasant a task as it may be, don't risk your business shutting down before it gets off the ground. Conducting business without the proper licensing is a criminal offense in some states, while others hand out hefty fines. Review these common retail licenses and permits to keep your business operating legally.
Federal Tax ID
An Employer Identification Number (EIN) is also known as a Federal Tax Identification Number and it is used to identify a business entity. It costs nothing to apply for an EIN (which you can do online), and most vendors require a tax ID before conducting business with a retailer.
How and where you register a retailing business with the state will depend on your state's laws. To find out what is needed to obtain a business license in your state, start by visiting your state's official website. You can usually find it at www.[your state's name].gov. Most states have resources on how to register a new business and all of the requirements that you must meet.
If you have a retail business located within the city limits, you also may have to purchase a local business license. Some counties and other municipalities also require a license. Call your county or city clerk's office for more information. The fee varies depending on the type of business and where it is located.
In order to purchase products to resell and not pay sales tax, your business will need a resale license or certificate. Not all states require a sales license and each state has its own name for this type of license.
This type of business license will allow your store to buy goods tax-exempt from a manufacturer or distributor; you then collect the sales tax from the customer and pay it back to the state. Most vendors will request a copy of your resale certificate before doing business with your company.
Business Name Registration or DBA Certificate
If you use any name for your retail business other than your own personal name, you'll need to file the appropriate paperwork. Some business licenses include a business name registration; others require a separate registration or a DBA (doing business as) certificate. When you file for corporate business structure, a foreign or fictitious name application is generally included.
Some industry-specific retailers such as auctioneers, hairdressers, pharmacists, optometrists, and other professionals may require state or local occupational licenses. If you're not sure you need an occupational license, check with your industry's trade association or your state's licensing department.
Certificate of Occupancy
A certificate of occupancy may be required for business properties in some areas. After applying, the property is inspected by representatives of the necessary agencies. These may include the fire department inspector, the building inspector, and the health and/or sanitation inspector.
There is no way to list all required permits, as the laws and regulations vary from place to place and from industry to industry. Check with local officials to find out what permits, if any, your retail business needs. Here are a few common permits to consider:
- Alcohol and tobacco sales
- Alarm system permit
- Building construction
- Health permit
- Special events
Before you open your doors to customers, be sure you've done the necessary research on retail business licenses and permits you need. Start filing the paperwork as soon as possible, expect delays, and provide all the necessary information to avoid any problems opening your business. Consult with a business lawyer if you have any unusual circumstances or need further clarification on obtaining retailing licenses and permits.