We received a question via our Business Advice Clinic from Raquel Rockwell who asked:
“I am doing business as a sole proprietor. What type of business licence should I obtain, if any?”
Although anyone can set up in business as a sole proprietor, for certain types of work you may need a licence or permission from your local authority, but every country and state will have their own rules and regulations.
I can see that you run a fashion retail business in America, although I am unsure which state you operate in, so it is best to check with your local authority. However you may be required to obtain the following licences and permits:
In most states you will need to register for a federal tax ID number which you can get online. This can also be known as an employer identification number (EIN), and is a number assigned to you by the IRS. If you have a business offering products or services that are taxed, or if you have employees then you will need a federal tax ID. You can apply for one for free at IRS.gov.
You may also need to obtain a sellers permit and a resale certificate, which is required by most states if you want to sell clothing. A resale certificate will allow you to purchase directly from a wholesale supplier without being subjected to your states required sales tax.
If you sell second-hand or vintage clothing (which I believe you do), you may need to research the customer protection laws in your state to ensure the fabrics and materials of the items you are selling are safe and everything properly labelled.
In some states you may need to purchase an assumed name licence for your business if you are operating under an assumed name (not your own legal name).
If you have a physical store, you may also need to apply for a permit to display signage both inside and outside of your store (as your state may govern how low a businesses sign can hang, what material it can be made of and how large it can be).
Do check with your states department of revenue and taxes on what business licenses you need to be on the safe side, as you don’t want to be succeptible to hefty fines for non-compliance.
You may also like to read our other Business Advice Clinic features:
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