Applying For A Business License and Tax Id

The reason why many people cannot purchase at true wholesale prices is because they fail to acquire a business license. Many think that applying for a business license is extremely complicated. Believe it or not, it's actually as simple as registering your vehicle with the DMV. A business license allows you to get a tax id and resale number which is often asked for on wholesale applications. Even if you don't have a storefront, you can apply for a business license. This article will take you through the simple steps you need to take to get a business license.

Ficticious Names

In some states the first thing you will need to apply for is your business name. This is also known as a "ficiticious name". For example, if your name is John and you wanted to start a tackle shop, you could call it "John's Quality Tackle". Make sure your business name is related to the category of wholesale companies you want to deal with. Some wholesale companies will not approve your application if your name sounds unrelated to their products. Once you've decided on your name you can move on to registering it. Make sure it's spelled correctly because you won't be able to change it once it's registered. Some states such as Florida allow you to register your ficticious name online. If you happen to live in Florida you can register your ficitcious name at http://www.sunbiz.org. Registering for a ficticious name is similar to registering a domain name. It usually costs about $50 and can take up to 3 days before it's fully registered. Once you've confirmed that your ficitcious name is registered you can move on to registering for your business license.

Choosing The Right Business License

If you're going into business by yourself, the best type of business license for you would be the "sole proprietorship". This basically means that you're the sole owner of your business. If you have one or more business partners a "partnership" would be the appropriate license. In my opinion, I think you should always go into business on your own and hire your friends and relatives as employees. Chances are you will have problems with your partner down the road and might regret going into business with them. While there are other forms of business legal structures, I don't think it's important to learn them now since you are just getting started. You can normally apply for your business license at your local neighborhood development office. If you're unsure where to do this, call your city's informational desk and they should be able to direct you to the proper department. You probably won't be able to apply for your business license online since you'll have to physically sign a few papers. Once you're at the right office, you'll have to fill out a form with your business name, address, and business legal structure. The person who is assisting you will process your information and assign the proper category for your business. If you're selling physical products, they might classify you as a "manufacturer representative". A business license normally costs about $65 but depends on what type and category your business is in.

Resale Numbers and Tax Ids

Considering you've been following the steps I've given you, you should now be ready to apply for a resale number and tax id. Your resale number or certificate can often be acquired through your state's website. It's normally free to register for it initially but will probably cost you money to renew it. A resale number is mainly used to collect sales tax from people who purchase from you within your state. A resale number is also often asked for on many wholesale applications. Make sure you submit your tax collections every 3 months or you may have to pay a late fee. This is true if you aren't selling to or collecting sales tax from buyers within your state. Another popular requirement on many wholesale applications is your "tax id". This is often referred to as an EIN or Employer Identification Number. This is basically like a social security number for your business. It also exempts you from any state tax you would normally have to pay for items that are purchased for wholesale or for your business. You can apply for a tax id at the Internal Revenue Service's website at http://www.irs.gov.

Business Bank Accounts

Most legitimate businesses have bank account with their business name on it. This allows you to accept checks and other payments in your business's name. It also gives your business more credibility and is a lot more professional than accepting payments in your own name. Some wholesale sources may also ask for a business bank account for further verification and to accept payments. Most local banks should have solutions for small business owners. This will often come with a small monthly fee that is well worth the money. Some banks such as Washington Mutual are solely dedicated to small business owners. They currently offer FREE checking accounts for small businesses.