# Starting a small business (which legal documents do I need?)



## thetrillest (Sep 22, 2011)

So I've been looking around the forums about people trying to start out their business and regarding to the legal documentation attached to it but there seems to be different answers which is only confusing me. Anyways from what I read, I'm thinking all I need is the DBA (gotten at my city offices) and a seller permit (also done at the city offices, right?). I'm starting out pretty small and really testing things out, don't want to go all out and have it now work out at the end or anything. I plan to sell to friends and just spread the word from there, I will also be selling shirts online (which is what I plan to do mainly) and only ship within the U.S. And i guess my next step after that, if it does work out would be register the name and logo. (Right now I'm using the TM) since I'm planning on registering. Am I missing anything here? or am I on the right track. All the advice is much appreciated.


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## clclothing (Jul 27, 2011)

Hi,

If you are using a ficticious name (something other than a name based on your real name) you will need a fictitious name filing, or dba. That will be filed with the state and can likely be done online. To go with that, you will probably need to run an ad in a paper that publishes at least weekly using a format that they will know advertising that you are now doing business under that name. Do not go to the major papers, they charge too much. Look for a local rag that offers the service for $30-40. (and check the specifics for your state by searching for fictitious name filing STATE NAME).

You will also need a resale certificate. You will get this from the state dept. of revenue.

In addition, you will need a business tax receipt or business license. That you will get from the county where you are located. If you are also in the city limits, you may have to get one from the city as well. Again, check local requirements.

That should allow you to operate legally. There are a lot of other things to investigate, like insurance, but that should be the legal stuff to let you operate as a sole proprietorship.

You may also want to get a tax ID number from the IRS to operate your business under. It is not necessary, but it is free and it will allow you to register for other things without spreading your social security number around.


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## thetrillest (Sep 22, 2011)

clclothing said:


> Hi,
> 
> If you are using a ficticious name (something other than a name based on your real name) you will need a fictitious name filing, or dba. That will be filed with the state and can likely be done online. To go with that, you will probably need to run an ad in a paper that publishes at least weekly using a format that they will know advertising that you are now doing business under that name. Do not go to the major papers, they charge too much. Look for a local rag that offers the service for $30-40. (and check the specifics for your state by searching for fictitious name filing STATE NAME).
> 
> ...


From my understanding resale certificate is the same thing as a seller permit. What exactly do I need a business license for? Right now I would only be selling online and to a couple of friends working from my house. As for the tax ID I thought that was for when you have employees, but since its only me in my house, I didn't think that was necessary. Will the DBA and seller permit alone not do?


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## clclothing (Jul 27, 2011)

You will need a business license if you county and/or city requires you to have one to do business in your locale. They used to call them business licenses. Now many have started calling them business tax receipts, which is at least more honest. They want their fees for you doing business. It is most likely a legal requirement. Whether you can get away without it is up to you.

A Tax ID is certainly important when you have employees, but it is a part of having a corporation or LLC as well as that entity need an identification number for tax purposes whether or not you have employees. As I said, it is not a requirement for a sole prop, but can save you from have to use your SSN for other filings, when you might not want to publicize your SSN.


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## thetrillest (Sep 22, 2011)

clclothing said:


> Hi,
> 
> If you are using a ficticious name (something other than a name based on your real name) you will need a fictitious name filing, or dba. That will be filed with the state and can likely be done online. To go with that, you will probably need to run an ad in a paper that publishes at least weekly using a format that they will know advertising that you are now doing business under that name. Do not go to the major papers, they charge too much. Look for a local rag that offers the service for $30-40. (and check the specifics for your state by searching for fictitious name filing STATE NAME).
> 
> ...



Is the business tax receipt the same thing as a business license?

So what I got from reading so far is:

-DBA (*fictious name*)
-Resale cetificate (*same thing as seller permit?*)
-Business tax receipt/business license (*don't know if they're both the same thing*)
-tax ID (*federal?*)
-City or State license? (*What is this for?, wait is this the same as a business license?*)

Am I missing anything or should I be good after that, also which one of these documents exempts me from tax when buying supplies?


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## clclothing (Jul 27, 2011)

That should do it for a Sole Proprietorship. 

Yes the resale certificate is like the same thing as a seller permit. Different states call them different things. This is the document that will allow you to avoid paying sales tax to your suppliers. You will then be responsible for either using those good in products for resale or pay the use tax for things that you use yourself.

Business Tax Receipt and Business License are the same thing.

Yes, the TIN will come from the IRS.

You will only need a license separate from your business license if your locale licenses screen printers (or whatever you are going to be doing) specifically, which I do not imagine they do.


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## thetrillest (Sep 22, 2011)

clclothing said:


> You will only need a license separate from your business license if your locale licenses screen printers (or whatever you are going to be doing) specifically, which I do not imagine they do.


What is this license called?? Is that what everyone refers to as a city or state license? And on that last sentence you said that I needed that license in order for screen printers to do business with me, is that right? or for what is it.

Learning stuff every day, the help is much appreciated


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## clclothing (Jul 27, 2011)

No, I meant that there are some professions, vocations, businesses that require a separate license. Some of these are Insurance Agents, Cosmetologists, Home Inspectors, etc. They need a separate license from the generic business license. I do not imagine that you will need that.

You had asked about a city or state license other than the business license. I do not think you will need one.

But you will need to check if you need a business license for both your city and county.

Your state should have some kind of department of business regulation or Professional Licensing if you would like to check for sure on the state license issue.


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## thetrillest (Sep 22, 2011)

clclothing said:


> No, I meant that there are some professions, vocations, businesses that require a separate license. Some of these are Insurance Agents, Cosmetologists, Home Inspectors, etc. They need a separate license from the generic business license. I do not imagine that you will need that.
> 
> You had asked about a city or state license other than the business license. I do not think you will need one.
> 
> ...


Oh ok that makes a lot of sense now, I'm only planning on selling shirts online mainly though. As far as the business licenses I am assuming they are given are a State and City level? Instead of just one for all? Which one is the most common that people on a similar situation get, they city or state one.


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## clclothing (Jul 27, 2011)

City and county level, usually. If you are in the county and also in the city limits you may need to get one for both, but check with your local office to be sure.


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## thetrillest (Sep 22, 2011)

clclothing said:


> City and county level, usually. If you are in the county and also in the city limits you may need to get one for both, but check with your local office to be sure.


Ok thanks for clarifying that up, like really thanks a lot


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## thetrillest (Sep 22, 2011)

clclothing said:


> City and county level, usually. If you are in the county and also in the city limits you may need to get one for both, but check with your local office to be sure.


One last question, is the "sales tax ID" the same thing as the "Federal tax ID"?


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## clclothing (Jul 27, 2011)

No. The Federal Tax ID comes from the IRS and is the number that is used to identify your company for Federal taxes. The sales tax ID will likely come from your state and is the number that identifies you for sales tax payments, use tax payments, and potentially other types of revenue payments to the state.


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## thetrillest (Sep 22, 2011)

clclothing said:


> No. The Federal Tax ID comes from the IRS and is the number that is used to identify your company for Federal taxes. The sales tax ID will likely come from your state and is the number that identifies you for sales tax payments, use tax payments, and potentially other types of revenue payments to the state.


Oh ok gotcha, would I also need one of those or would I be ok with just the federal tax ID and all the other documents.


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## clclothing (Jul 27, 2011)

You need a resale certificate or a seller's permit or whatever your state calls it with a resale tax ID in order to sell anything. You will have to report sales to the state on a quarterly or monthly basis (depending on volume) and include sales made to people from whom you are required to collect sales tax along with the payment of that sales tax and ALSO report exempt sales, which are sales to others who are buying them for resale (like wholesaling to a store who is going to carry your shirts) OR sales to people out of state from whom you are not required to collect sales tax.


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## thetrillest (Sep 22, 2011)

clclothing said:


> You need a resale certificate or a seller's permit or whatever your state calls it with a resale tax ID in order to sell anything. You will have to report sales to the state on a quarterly or monthly basis (depending on volume) and include sales made to people from whom you are required to collect sales tax along with the payment of that sales tax and ALSO report exempt sales, which are sales to others who are buying them for resale (like wholesaling to a store who is going to carry your shirts) OR sales to people out of state from whom you are not required to collect sales tax.


So pretty much I need the resale tax ID (same thing as sales tax ID) for taxing purposes, and to be tax exempt on certain things, but the federal tax ID is only required when you have employees, but if you don't, it helps use the ID number instead of giving your SS around. Which overall having both would be helpful. Am I making progress here, or am I still confusing things around.


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## kimura-mma (Jul 26, 2008)

What state are you in?


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## thetrillest (Sep 22, 2011)

kimura-mma said:


> What state are you in?


Big ol' Texas


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## kimura-mma (Jul 26, 2008)

Different states have different rules and terms for the legal requirements needed to operate a business. So that's probably one of the reasons for the confusion.

Try Googling "starting a business in texas" and you should find several good resources with all the specific info you need to get started.

If you still need help, contact you local chamber of commerce or contact a local accountant to help you set up your business.


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## purplecheese (May 22, 2011)

Here's a link to help get started with the Texas Sales Tax ID number:

Sales Tax and Your New Business

You can go a couple of different routes, depending on how you want to setup your business. We went LLC which was a $300 fee to the state and a couple of weeks for the paperwork to go through.


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## thetrillest (Sep 22, 2011)

purplecheese said:


> Here's a link to help get started with the Texas Sales Tax ID number:
> 
> Sales Tax and Your New Business
> 
> You can go a couple of different routes, depending on how you want to setup your business. We went LLC which was a $300 fee to the state and a couple of weeks for the paperwork to go through.


Thanks for the link, are you also in Texas?


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## purplecheese (May 22, 2011)

Yes, we are in Texas.

Oh and when you do your Sales Tax, be sure to do it by the due date of when you file (quarterly, bi yearly, or yearly). Late reports and payments are now penalized a $50 fee!


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