The Law: Making Sure Your Business Complies 4
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Do I really have to go to all that trouble?
Like so many other things in business, it's a judgment call. If you will be operating only in a small local area, and could, if you had to, change your name without a tremendous loss of money or customers, you may want to skip the national name search and just search for similar names in use in your area. If you proceed this way, you must realize that if some company based in another region is using the name as a trademark or trade name and moves into your area, they might be able to force you to stop using the name.
When do I register a business name?
The time to register your business name is as soon as you are sure you are going to go into business and decide on a business name. You wouldn't want to go to the trouble and expense of getting business stationery, opening a bank account in the business name, and advertising the name if you won't be allowed to register it. It's a good idea to also register the name as a website name at the same time, if it's available. If you don't, someone else may register your business name as a website name.
Do I have to register in every county, state, and city I plan to do business in?
If you only maintain an office in one location and do not physically travel from place to place selling merchandise, you probably will not be required to register your name in any place other than your own county, city, or state. For instance, if you live in Kansas and have a mail order business that advertises in a national publication, you would not be required to register your business name in every state in which you have customers. (Even though you may not be required to register your business name in other states or localities, you might find it beneficial to register your business name as a trademark either in one or more states or nationally to prevent other companies from using a business name like yours to sell similar goods.)
Things work differently, however, if you are a flea market vendor or craftsperson who travels from place to place selling goods. In such cases, you may be considered to have a physical presence (which is called nexus) in each locality in which you set up a booth or rent a table to sell your goods. You may therefore be required to register your business, get a license, and to collect and remit local sales taxes. If you are unsure of the requirements, show promoters and other vendors should be able to tell you what to do and whom to contact.
If you have offices in several counties or states you may be required to register in those areas. If you operate as a corporation you have to register as a foreign corporation in any state you have offices in other than the state in which the corporation secures its charter.
How do I sign up to collect sales tax?
If your state collects a sales tax, call the state tax department and ask for information about getting a sales tax number, also called sales tax permit, resale number, or resale permit.
Do I have to pay sales tax on items I buy for the business?
What is taxable and what isn't taxable varies from state to state, but generally, if you buy taxable items that will be consumed in operating your business (say, paper or toner cartridges) you either have to pay the sales tax on them when you purchase them or, if you use your reseller's number to avoid paying tax at the time of purchase, you will have to pay a use tax for using the items. The use tax will be equal to the sales tax you would have paid. The difference is that you will send it in at the same time you send in sales taxes collected on items you have sold to your customers.
On the other hand, if you are purchasing something that will be used to make a product you will sell (a hard drive that you will be installing in a computer system you build from scratch for a client, for example), you do not have to pay sales or use tax on the purchase if you have a sales tax number. The reason is that sales taxes in the United States are paid by the consumer, not the manufacturer.
Do I have to have an attorney to start a business?
You aren't required to have an attorney to start a business, and many businesses do not have legal help getting started. If your business is regulated by local, state, or federal authorities, if you will be writing or accepting contracts involving significant sums of money, or if you will be operating as a partnership or corporation, it is highly advisable to consult with an attorney. The money you spend up front to make sure things are set up properly and in your best interests can save you hundreds of thou-sands of dollars and much aggravation in the future.
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