If you are ready to start your own business, there is one important step that you cannot forget. Regardless of the state you live in, you must get a business license. This business permit is the credential that allows you to begin operations for your own enterprise. Furthermore, without such a legal document, you can be fined by your state of residence if you are caught operating without official licensure. As for what kinds of companies you can open up with the help of a business permit registration document, there are many different options to consider. First of all, you can open a C Corporation or an S Corporation. C Corporations are subject to double taxation, but they provide better tax planning flexibility and can better protect shareholders from any liability. Meanwhile, S Corporations have limitations on the shareholders they can have, but they only have one level of taxation. In addition to these two types of corporations, you also have the option of opening a Limited Liability Partnership or a Limited Liability Company. Or, you may decide that partnerships are not for you and open a business that is a Sole Proprietorship. Furthermore, you may consider being philanthropic and running a Nonprofit Organization. The possibilities that your business license gives you are virtually endless. All you need to do is consider the kind of venture that you want to open and think about which kind of business would work best for it. And you can learn all about your options in the sections below.
How to Get a Business License
If you are considering starting a business, no matter what the venture may be, you will have to apply for a business license. And although the steps may vary based on whether you need to get a city, state or federal business credential, the process is usually simple and typically requires you to complete the following basic steps:
- Learn about your city/state’s business regulations: As mentioned before, different locations will have different requirements which must be met in order to receive licensure.
- Fill out the business permit forms specific to your state: The last thing you want to do is fill out forms for another part of the country and later find out that you have to go back and complete the right ones.
- Submit the forms to your local finance department: In addition to the business permit application, be sure to include the necessary fee.
- Get your business permit registration certificate: Once you have completed all of the above steps, you should receive your license by mail. Just be sure to always maintain proper practices, so that you do not lose your business license.
By following these steps, you can get a business license that can be used to open a wide variety of corporations and companies. To learn more about these different business ventures, consider the sections below.
Advantages of C Corporations and S Corporations
License holders who are preparing to start a business in their states of residence should know that C Corps and S Corps have a number of similarities that tie them together. First of all, both of these corporations offer limited liability protection and are separate legal entities that are created when you file for a business. Additionally, both of these businesses must be filed for with an application within the state. As for their structure, both also have shareholders, business officers and directors in common. But if you are considering forming an S Corp, the main differences between the two businesses are that S Corporations have shareholder limitations, but only receive a single S Corp tax, while C Corporations do not have as many limitations, but are taxed on both the corporate and individual levels.
Benefits of Limited Liability Partnerships
Another option to consider is a Limited Liability Partnership with investors, also known as an LLP. In this situation, you can offer protection to all of your various investors and function with more simplicity than an S Corp or C Corp will allow. However, just as with creating a corporation, forming a partnership in the business sector requires that you apply for a business license from your city, state or federal office, depending on the kind of business you are starting.
Reasons to Start a Limited Liability Company
If you are not certain whether you prefer a corporation or a partnership arrangement, another option to consider is forming an LLC. By combining the corporation and partnership structures, Limited Liability Companies offer financial flexibility to their business leaders, while also limiting the amount of administrative work. That means there is less record keeping and paperwork necessary to start an LLC, though you will still have to submit certain paperwork when you apply for a business license.
Benefits of a Nonprofit Business
The next option to consider if you are starting a business is incorporating a Non Profit organization or Nonprofit Corporation. The benefits of this kind of Nonprofit venture are many. The quickest benefit that probably comes to your mind is that you will be helping your community. And by doing so, you will receive various advantages. First of all, entities that have NPO business incorporation receive funding from the government. Secondly, you will receive tax exemption on your business costs. And finally, in this position, you can fund philanthropic causes to help specific groups.
Reasons to Consider a Sole Proprietorship
One final option to think about when you are in the process of getting a business license is the possibility of starting a Sole Proprietorship. The benefits of this kind of business are mostly in the area of simplicity. Filing Sole Proprietorship taxes is simpler than filing taxes for any other business entity. And the environment is virtually stress-free, with one reason being the ability of a sole proprietor to write off costs for the business and another reason being the fact that formal paperwork is not required when you are setting up this kind of a business. All you need to do to begin operations is get a business license.