Before an entrepreneur can legally start a new business, there are a few business
licenses and registrations that need to be obtained.
One of the most important of new
business licenses is tax registrations. An entrepreneur needs to fill out
forms to obtain an Employment Identification number for the new business. At this
time, the entrepreneur also needs to decide on the structure of the business.
The most common forms of business that a new business owner may consider include
sole proprietorship, partnership, corporation, S corporation and Limited Liability
Company. The Limited Liability Company is a relatively new business structure allowed
by state statute. There are many benefits as well as some disadvantages associated
with all the business structures.
One of the most promising business structure for a new business is the Limited Liability
Company structure. The advantage of this structure for a top new business owner
is that it is a type of business ownership combining several features of corporation
and partnership structures. However, it is not a corporation or a partnership.
Another advantage of the Limited Liability Company structure is that the owner of
the business can select varying forms of distribution of profits. Unlike a common
partnership where the split is 50-50, LLC have much more flexibility.
Based on the business activity or product, an entrepreneur may need to get a couple
of other new business licenses. An entrepreneur looking to start a public transportation
and trucking company needs to get a license from the Motor Carrier Safety Administration,
an investment agency needs to get a
new business license from the Securities and Exchange Commission and an
entrepreneur involved in the food industry needs to get registration from the Food
and Drug Administration as well as the Bureau of Alcohol, Tobacco and Firearms in
the U.S. Treasury Department.
Apart from these Federal agencies, an entrepreneur also needs to get the approval
of several state agencies before setting up the new business. This includes the
city council, the water and sanitation department and the fire department.
Sometimes, an entrepreneur may also need the approval of the Environmental Protection
Agency. This is the case in new businesses that work or use chemicals or toxic products.
An entrepreneur needs to get the approval of several Federal and State agencies
before the new business can be established.