Last month, Daniel Ingersoll joined me on Power of Attorney to discuss the process of starting an Internet business. As part of that discussion, Daniel outlined a number steps that are often overlooked by new entrepreneurs, who may have a great vision for their fledgling business but lack experience in the logistics of starting a new endeavor. After forming an entity for the business, Daniel advises that a new entrepreneur:
- Apply for a federal taxpayer identification number (EIN). Daniel advises that this acts as the introduction of the new business to the federal government and the Internal Revenue Service.
- Register to do business in foreign jurisditions. The business entity will be formed in a certain state but must register to do business in all of the other states in which it will do business. Generally speaking, if a business entity is required to register to do business in a certain state, it will probably have to pay income tax in that state as well.
- Register applicable fictitious names. Many businesses trade under, or are known by, a name other than the formal name of the company. In such cases, the business must register all of its "nick names" with the appropriate court or agency.
- Obtain necessary local, state, and federal licenses. While most businesses do not require a federal business license, many do require certain local and state licenses to conduct business. Just because a company transacts business exclusively online dos not relieve it of the responsibility to obtain the necessary business licenses.