From the Nolo Business & Human Resources Center
Federal Start-Up Requirements for Small Businesses
Big Brother loves paperwork. Find out what you have to
submit to the federal government.
Before a small business can legally begin, it needs to take care of a number
of pesky requirements with governmental agencies, from the city to the state to
the federal government. None of these requirements are difficult or even
terribly time-consuming. But finding out what you need to do can be like putting
together a jigsaw puzzle without knowing what it will look like. Below, we set
out a general outline of these requirements at the federal level.
| Why Am I Filling Out All These
Forms? |
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The various permit and license requirements for new businesses have three
main purposes:
- to identify your business and make sure you're accountable for your actions
- to protect the public health and safety, and
- to keep track of your finances for tax purposes.
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Tax Registrations
You should know about two kinds of federal tax registrations. The first is
the Application for an Employer Identification Number (EIN), Form SS-4, which is
available free at www.irs.gov. All corporations,
limited liability companies (LLCs), and partnerships, as well as sole
proprietors who will hire employees, need to apply for EINs.
Although using an EIN is a good way to keep your business and personal
affairs separate, the IRS doesn't like to give an EIN to a sole proprietor
without employees. In that case, you will probably use your own Social Security
number rather than a separate EIN.
Second, if your business is a corporation and you want to elect status as an
S corporation (for special tax treatment), you need to file Form 2553, Election
by a Small Business Corporation, also available at
www.irs.gov.
Licenses for Regulated Businesses
You’re not likely to need a federal license or permit unless your business
activity or product is supervised by a federal agency, such as:
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