Federal Start-Up Requirements for Small Businesses

Big Brother loves paperwork. Find out what you have to submit to the federal government.

Before a small business can legally begin, it needs to take care of a number of pesky requirements with governmental agencies, from the city to the state to the federal government. None of these requirements are difficult or even terribly time-consuming. But finding out what you need to do can be like putting together a jigsaw puzzle without knowing what it will look like. Below, we set out a general outline of these requirements at the federal level.

For information on municipal permits and regulations, see Local Start-Up Requirements. For details on state registrations and licenses, see State Start-Up Requirements.

Tax Registrations
You should know about two kinds of federal tax registrations. The first is the Application for an Employer Identification Number (EIN), Form SS-4, which is available free at the IRS website. All corporations, limited liability companies (LLCs), and partnerships, as well as sole proprietors who will hire employees, need to apply for EINs.

Although using an EIN is a good way to keep your business and personal affairs separate, the IRS doesn't like to give an EIN to a sole proprietor without employees. In that case, you will probably use your own Social Security number rather than a separate EIN.

Second, if your business is a corporation and you want to elect status as an S corporation (for special tax treatment), you need to file Form 2553, Election by a Small Business Corporation, also available at the IRS website.

Licenses for Regulated Businesses
You're not likely to need a federal license or permit unless your business activity or product is supervised by a federal agency, such as:

• Public transportation and trucking (the Motor Carrier Safety Administration)
• Investment advice (the Securities and Exchange Commission)
• Preparation of meat products or production of drugs (the Food and Drug Administration)
• Tobacco products, alcohol and firearms (the Bureau of Alcohol, Tobacco and Firearms in the U.S. Treasury Department).

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