When starting a business there federal small business requirements which must be fulfilled by all beginners. Both the state and federal governments impose certain requirements on small businesses to function properly.
Federal requirements and licenses for small businesses
From a federal perspective, there are several important requirements for small businesses that the government imposes on businesses.
Company structure and taxes
One of the first decisions of a company will be to decide what type of business structure to adhere to. The type of structure will determine how much regulatory paperwork the business will have to file, as well as the taxes it will pay. The different structures for small businesses include:
- Sole proprietor (taxes paid through the owner’s personal income statement);
- Collective partnership (taxes paid through the owners’ income tax return);
- Corporation (taxes paid by corporation);
- S corporation (taxes paid through personal tax returns, but owners should receive “reasonable compensation”);
- Limited Liability Company (LLC) (hybrid legal structure, taxes paid as a partnership, but receiving personal liability shield);
- Non-profit (may be tax exempt).
The tax and regulatory implications of various business structures increase the more companies are classified as public limited companies. Corporate taxes are more complicated than paying business income taxes and professional assistance should be obtained from a tax attorney or accountant. The specific tax forms required by the IRS for each of the business structures listed above can be found on the IRS website or the US Small Business Administration website.
Employer identification numbers
Employer Identification Numbers (EINs) are typically required of all businesses (although most owners with no intention of hiring employees are exempt – – check the IRS website to confirm if your business needs to apply). An EIN is used by the IRS to identify a business entity for the purpose of tracking the business and determining the taxes it and business-related parties (employees, vendors, etc.) owe to the government. Businesses can now apply for EINs online, and the EIN is posted immediately during the application session.
Licenses and permits
In addition to the requirement to obtain an EIN, companies in certain industries are required to apply for licenses and permits to do business. While most businesses do not have to register with the federal government (but they do have to register with the federal government), if your business falls into the following categories, you should check with the governing federal agency to determine if you need a license or permit (see “Federal Business Licenses” for more information):
- farming – The United States Department of Agriculture issues permits for companies engaged in the importation and interstate transportation of animals, animal products, biological products, biotechnology, and plants.
- Alcoholic drinks – Manufacturers, wholesalers, importers and retailers of alcoholic beverages must register, pay excise duties and maintain certain records with the Alcohol and Tobacco Tax and Trade Office (ATTB).
- Aviation – The Federal Aviation Administration (FAA) issues licenses for pilots, aircraft, airports, and medical aviation services.
- Environmental – The Environmental Protection Agency (EPA) imposes environmental regulations at the federal level. If your business buys or sells contaminated land, you will need to go through the EPA to get rid of the contaminants.
- Firearms, ammunition and explosives – Manufacturers, dealers and importers of firearms and ammunition are controlled by the Office of Alcohol, Tobacco and Firearms (ATF).
- Fish and wildlife – Businesses engaged in any wildlife activity, including the importation of any wildlife or its by-products, must receive a permit from the United States. Fish and Wildlife Service.
- Investment Advisory – The Securities and Exchange Commission (SEC) requires that those who professionally advise on investments obtain a license.
- Mining and drilling – Minerals Management Service (MMS), an office of the United States Department of the Interior, is the federal agency that manages the nation’s natural gas, oil, and other mineral resources.
- Radio and television broadcast – If your business broadcasts information by radio, television, cable, cable, satellite, and satellite, you must obtain a license from the Federal Communications Commission (FCC). The FCC does not regulate the Internet.
- Interstate ground transportation – you must register if your business will cross state lines.
- Marine transport – The Federal Maritime Commission issues licenses for companies that transport cargo or passengers in the ocean.
Name your business and protect your property
Once you have decided on the structure of your business and determined whether the business falls within the purview of a federal agency, you will have to choose a business name and see if it violates the federally protected trademark of another business. You can do a simple search with the US Patent and Trademark Office. (USPTO), as well as a search for similar businesses using Internet search engines.
You may have already chosen a business name, but due to the potential waste of time and money associated with marketing a name that you ultimately cannot use, you should take at least a few precautionary steps before diving into. Also, once your business is up and running, you must take steps to protect your business trademark. You can register your business name with the USPTO even before you start using the name in business (called the Intent to Use application).
Also, if your business has any intellectual property, you’ll want to protect it by registering it with the USPTO, whether it’s patents, copyrights, or trademarks. And after you’ve registered your property, you need to vigilantly protect it on your own (the USPTO is not a law enforcement agency).
advice
While you want to be a brilliant entrepreneur, trying to figure out all the requirements of federal business law can be confusing. A trained attorney can help you meet all the requirements and save you hours of lost productivity. Contact a local attorney for a legal review of your business plans to help you execute your business plans successfully.