With today’s technology, starting a home-based and/or online service business can be as simple as letting others know about your expertise, establishing a website or social media page, publishing an ad and/or other eCommerce offer. Voila, you’re in business.
Why not just a sole-proprietorship?
Many service-based small businesses choose to operate as a sole-proprietorship or independent contractor. Compared to other business structures, setting up a sole proprietorship is fairly easy and less costly. For example, sole proprietors without employees are not required to have a Federal Employer Identification Number (EIN) and can use their Social Security number to report taxes. In some states, like Florida, sole proprietorships are not required to register with the Department of State.
The ease that technology provides and the availability of the sole proprietorship business structure does not eliminate the legal requirements of obtaining a business license. In Florida for example, the law requires any business selling merchandise or services to purchase a local business license known as a local business tax receipt from its home-county, and comply with any local business license and zoning requirements.. This includes one-person companies and home-based businesses, whether they sell their goods or services online or from a brick-and-mortar office. When you operate a business without required licenses, you risk civil actions and penalties. The same civil actions and penalties apply to annual renewals as well.
Business License Benefits
Aside from local licensing regulations, whether a business license is required or not, there are benefits to registering your business. Dependent upon the business structure, you may be able to claim certain tax deductions, and eliminate the personal liability for business debts and litigation claims. A state registration provides your business a greater appearance of legitimacy, reduces identity theft opportunities, and also creates a presumptive ownership of your business name within your state. Lastly, many banks require an EIN, State Registration, and Articles of Incorporation to open a bank account.
So before you open your small business, take the time to consider: do you want to protect your personal assets, avoid fines and penalties, and boost your business credibility? Be sure to consider obtaining your business licenses first.
Are you and/or your business Florida based? If so and you need help with your business licenses, we’re here for you. Contact us here.
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