It is the responsibility of every business owner to know what is required of them from the federal government. Making sense of these requirements can be difficult, however. While the exact specifications are unique to each business, there are always going to be requisites. To learn what may be required of your business, take a look at this simple, short guide.
Federal Business Licenses
The most basic requirement for businesses is the Federal Business License. You might be surprised to learn that most businesses do not require a license. The federal government only regulates businesses in certain areas. To be certain, you should research whether your industry requires a license. The most common fields you must be licensed to operate in are:
- Preparation and selling of food – To learn more, contact the Food and Drug Administration (FDA).
- Drug manufacturing – Again, you should contact the Food and Drug Administration.
- Broadcasting – The Federal Communications Commission (FCC) handles all broadcasting companies.
- Transportation – Contact the Department of Transportation (DOT).
- Investment advising – All investment advising firms should contact the Securities and Exchange Commission (SEC).
- Alcohol, tobacco, or firearms – Contact the Bureau of Alcohol, Tobacco, Firearms, and Explosives (AFT)
- Agriculture – The U.S. Department of Agriculture handles these businesses.
Specific licenses may also be required for the transportation of animals, businesses interacting with the environment, or mining or drilling.
Employer Identification Numbers
While a license may not be required for your business, an employer identification number most likely is. The only businesses that are exempt are sole proprietors who will not have any employees. Even if you are operating your business alone, you should check to make sure you are exempt from this requirement because some sole proprietors must still register an employer identification number, or EIN. Your EIN will be used for tax reasons, tracking your business and all businesses you interact with. It may be possible for you to acquire your EIN by applying online instead of in person. Learn more about the requirements for employer identification numbers on the IRS website.
Determining Your Business Structure
You should also determine what kind of business structure your company follows. Different paperwork will be necessary depending on your chosen structure. The biggest difference this decision will make is when paying taxes. The most common business structures are:
- Sole Proprietor – If you are the only person associated with your company, it is a sole proprietor business. These kinds of companies simply pay taxes through their personal tax returns. Remember that sole proprietors cannot have partners or employees.
- Partnership – Businesses with two or a small group of owners are considered partnerships; however, it is also possible for companies with just a few employees to be considered a larger company. Again, partnerships pay taxes through the personal tax returns of the owners.
- Corporation – These are the most common kinds of business and are defined as being distinct from the owner or owners. Taxes are paid through the corporation for these kinds of companies.
- Non-profit – If no profits are earned, your business counts as a non-profit organization. Other requirements also apply, however. Non-profits are not required to pay taxes, but they must fill out other paperwork to show that they are not making profits.
- Limited Liability Company – Finally, a limited liability company, or LLC, is a hybrid between a partnership and a corporation. Owners receive a personal liability shield, but taxes are paid like a partnership.
Remember that this guide is only meant to serve as an introduction to federal business license information. Local governments and state governments may also have unique restrictions and requirements that cannot be listed here. The best course of action is to check with a local governing organization to ensure you are meeting all requirements at a local, state, and federal level. Ultimately, however, it is your responsibility to be well-informed about the requirements that are placed on your business.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.