Updated: Oct 23
It is required by law to register your business and pay taxes yearly. Failure to do so will cost you big! In many cases, you will have to register portions of your business prior to purchasing inventory, opening bank accounts and others. Take care of as much legal business (especially the free items) as you can before launch and shortly thereafter.
EIN EMPLOYEE IDENTIFICATION NUMBER
The Employer Identification Number (EIN), also known as the Federal Employer Identification Number (FEIN) or the Federal Tax Identification Number, is a unique nine-digit number assigned by the Internal Revenue Service (IRS) to business entities operating in the United States for the purposes of identification.
Where to Get > IRS.gov
DBA - DOING BUSINESS AS
A company is DBA (or “doing business as”) when they operate under a name that is different from their legal name. Filing for a DBA allows you to do business under a name other than yours, or the name under which your business is legally registered.
Where to Get > Filing a DBA is usually done in person, at either the county clerk's office or the state department, depending on the state and where you plan to do business. In some states, this can be done online.
Source: Fundera, Gov Doc Filing
SELLER'S PERMIT AND SALES CERTIFICATE
A seller's permit is a state license that allows you to sell items at the wholesale or retail level and to issue resale certificates to suppliers. Issuing a resale certificate allows you to buy items you will sell in your business operations without paying tax to your suppliers.
Where to Get > Most states allow you to file your application for a seller's permit (or other sales tax registration) and pay online. Go to the website of your State Department of Revenue (or other designation) to find the online link.
Source: CDTFA, TaxJar, The Balance
Cost: Registering for a sales tax permit is free in the majority of states. In other states, it only costs a small fee usually less than $20. See your state cost here
LOCAL BUSINESS TAX RECEIPT (FLORIDA)
Any person doing business in Jacksonville/Duval County must obtain a Local Business Tax Receipt. Any businesses located in another municipality in Duval County are required to obtain a city Business Tax Receipt from that municipality where the business is located, in addition to paying the county tax for Duval County. Any person who provides merchandise, entertainment, or services to the public, even if only a one-person company or home-based business, must obtain a Local Business Tax Receipt before starting business.
Where to Get > You must apply for new Local Business Tax Receipts in person downtown in any FL county.
Cost: Dependent on several conditions such as: the number of employees, equipment and seating capacity are a few variables that factor into the amount of tax due.
DETERMINE BUSINESS STRUCTURE
For home-based businesses, online businesses or other small businesses, a sole proprietorship is often the best option because it is the least complicated and gives you complete control over your business. You can be held personally liable for the debts and obligations of the business. For tax purposes, the profits and losses of the business flow through to the owner's tax return and reported as earned income. Sole proprietors still can use a name different from their own in order to run a business with a DBA (doing business as). However, the DBA cannot contain terms such as a corporation, incorporated, or LLC unless the business legally operates as such.
LLC (Limited Liability Company)
Forming an LLC will help to protect your personal liabilities (i.e. house, vehicle) from lawsuits and prevents them from being at risk in case your LLC faces bankruptcy or is sued. Members of an LLC are considered self-employed and must pay self-employment tax contributions towards Medicare and Social Security (unlike a sole proprietor). LLCs can be a good choice for medium or higher-risk business owners that have a significant amount of assets that they want to be protected. There are more fees and filings involved to file an LLC.
BANK ACCOUNT (OPTIONAL)
Keep your business income separate from your personal business account. It is much harder to save when your personal assets and business assets are combined. In addition, separating your business and personal finances will protect your personal assets in case of a lawsuit, preserve your personal credit score if your business fails, make your bookkeeping and taxes that much easier, and generally make you look more professional in the eyes of your clients (and small business lenders).
Where to Get > Azlo