What Classifies a Business as Legal?
- Many states require a business to file what is commonly referred to as Articles of Incorporation or sole proprietorship papers with the Department of State. These papers let the state know what the name of the business is, who is responsible for it and where to send all official documents. The state may require a business to file an annual report advising if any revenue was made and of any changes in ownership or managers. Once these papers and reports are filed, the state sends an annual certificate of incorporation.
- The IRS requires all businesses to obtain an Employment Identification Number, or an EIN to file taxes. This is also referred to as a PTIN. This number is used when paying all quarterly income and employment taxes. This process is simple and usually takes one to three business days to get the EIN from the IRS office. This also helps distinguish personal tax liability from business tax liability.
- The majority of cities and municipalities in the United States require businesses to obtain a local business license. This gives businesses the right to conduct transactions within city limits. Sometimes counties also require a business license so they can also receive a portion of your monthly revenues. A county tax number is issued to allow convenient filing of all county taxes.
- Sometimes it is necessary to obtain a local zoning permit to conduct business in a specific area. Many cities have specific areas zoned for residential buildings, and other areas zoned for specific types of businesses. It is important to have a zoning permit so you are sure your business in located in the proper area of the city.
