Many entrepreneurs start their new business without realizing that there is more to a business than a good idea and choosing the right entity form. While those two are very important, there are many other federal, state and local requirements that have to be followed. These requirements are there to ensure that the new business follows tax, safety, licensing and other laws, regulations and local ordinances. In general, these requirements can be split into two categories:
- General requirements that are common for all businesses, such as obtaining Federal Employer Identification Number and implementing proper procedures to ensure for safe work place to name a few;
- Industry specific requirements that will change from one type of business to another, such as obtaining the liquor license for a restaurant or passing the building and fire inspections for a condominium.
We would like to give you some general idea on both types of these requirements. However, please remember that every business will have its own unique needs and it is advisable to contact an experienced attorney to discuss the proper steps that need to be taken to ensure that your business complies with all necessary requirements.
Examples of General Requirements Common to All Businesses
Filing for Fictitious Business Name: Any time you want to do a business under the name that is not your own, you will have to file for a fictitious business name. This is required in order to connect the person operating the business to the business, so if any problems arise, the identity of the owner can be established. A fictitious business name that you select should not already be in use by someone else. There is a filing fee to register the fictitious name and it changes from one county to another. You also have to renew your filing each year by filing the renewal form and paying the extension fee.
City/County Business License: Most cities or counties require that a business operating within its territory be registered with them. Each local government has its own forms which typically ask for the names of the business managers or owners, the address where the business will operate, the trade in which the business will engage in, and the number of employees. Cities typically issue a business license to the business and assess various taxes based on the value of business equipment on premises and payroll.
Obtaining Federal Employer Identification Number (EIN): EIN, also called federal tax ID number, is a number specifically assigned to your business by the IRS. Your tax ID number is subsequently used to identify your business to several federal agencies responsible for the regulation of business. Some sole proprietorship use a Social Security Number in lieu of the EIN. Any business offering products or services that are taxed in any way must get a federal tax ID number. If your state taxes personal services, or if you are required to collect sales taxes on your sales, you need a federal tax ID number. All the government forms you will be required to file for your business will require either a Social Security number or a tax ID number. It is safe to say that any business that has employees and/or pays any kind of taxes will need a federal tax ID. You can obtain it by filling out IRS Form SS-4 or your attorney can obtain it for you.
Obtaining Insurance: Once you have established your business, but before you begin operations, you should make sure that the business meets all required insurance. For example, any business that hires an employee is required to obtain a worker’s compensation insurance. All vehicles—cars, trucks, vans, SUVs, motorcycles, etc.—that are used on an employer’s behalf must be insured for minimum third party liability. Other forms of insurance such as liability insurance or malpractice insurance are optional but recommended.
Compliance Building Codes: Each business that has commercial premises must comply with the applicable building codes, and the regulations tend to be more onerous if the business premises are open to the general public. For example restaurants, bars, automobile garages, and drycleaners must each comply with general building code requirements and additional requirements that are specific to the type of business they conduct. Oftentimes, before a new business can even open, building and fire inspectors must verify that the business premises meet all of the regulations. Persons who are purchasing a business must check whether there are any violation notices lodged with the city building department, because the city will expect any new owner to comply and bring the premises into compliance. Sometimes a business that operates for a long time may be “grandfathered” in under older and more lax regulations that existed when the business started, but a renovation may inadvertently trigger expensive compliance with the most up-to-date codes. Building code compliance issues can make or break a business because they tend to be expensive, disruptive, and time consuming.
Examples of Specific Requirements for a Particular Business
Some regulations are specific to a particular business entity type. Bars need to obtain an alcohol license, laundromats must comply with environmental and volume issues related to their discharge of water into the sewer system, laundry cleaners must comply with various environmental regulations specific to chemicals they use to clean clothing, child day care centers must be appropriately licensed by the state, and private transportation companies must submit their drivers to drug and alcohol testing and keep their vehicles insured and in good working order. Some of the regulation require time consuming filings and result in lengthy licensing processes. Each business owner needs to be aware of the existence of these specific requirements so that he or she can take them into account when determining when the business and how much it will cost to open the business.
Your Legal Compliance Attorneys
Before starting a business, the owners must not only comply with entity specific requirements that relate to their particular business type (LLCs, corporations etc.), but also meet the general and specific regulatory requirements governing the industry in which they will operate. Regulatory violations are treated seriously and may cause the business license to be suspended and the business shut down, especially when they subject the public to potential harm.
The Zurada Law Firm represent business owners throughout the San Francisco and California Bay Area, and its attorneys can help you to assess and navigate compliance with all necessary local, state and federal regulations. Remember that your case may involve special attention and may need a strategic approach that only an experienced attorney can help with.
If you have any kind of questions or concerns regarding your business, please give us a call at the number above or fill out our intake form. At the Zurada Law Firm, we know how to take care of business. We would be honored to be your Bay Area/San Francisco attorney, and your first consultation with us is always FREE.