BUT WAIT, THERE’S MORE! OTHER BUSINESS TAXES

Professional Licenses

I was consulting with a person who wanted to start a counseling office for troubled teens. It sounded like a great idea, until I asked about her background. She had recently completed a three-week online coaching course.  She had given a few people advice, helped them, and decided it was her life’s calling. It’s a beautiful story. She was inspired. She couldn’t wait to quit her job and open a counseling office.

Except the state did not care. My state requires a Master’s degree and 2000 hours of supervised patient contact before you can call yourself a counselor. She had an internet certificate and no experience.

Professional licenses are granted by the state for things like health care professionals (from brain surgeons down to CNAs) (and counselors). Teachers, architects, lawyers, engineers, and accountants also require professional licenses, college degrees, experience, and review by your peers to work in your state. Some also require that you join a professional association of your peers to keep your license.

What to do: Check to see if your business requires a professional license in your state.

Trade Licenses

At another consultation, I had someone want to start a business fixing the streets. It seemed like a noble cause; the streets always need fixing and repaving. He had already bought the equipment. However, he needed a contractor’s license to bid jobs for the state. To get a contractor’s license in my state, you need work references, and you need to show you are financially able to complete the job.

Electricians, plumbers, HVAC, and certain other trades all require a certain amount of training and experience through an apprenticeship. Other construction trades like sheet rock, paint, flooring, and paving streets require a trade license or contractor’s license in many states.

Any job where you are touching other humans also usually requires a trade license. Tattoo artists, beauticians, barbers, massage therapists, and manicurists all require a trade license.

What to do: Check to see if your business requires a trade or contractor license.

Occupancy Permits

If you a want a commercial space to operate your business, like a shop, store, or warehouse, you will need an occupancy permit. Your place of business must be safe. This means marked exits, fire extinguishers, building up to code, disability access, and a number of other things depending on your locality. Places like restaurants and food manufacturers have to have ventilation hoods. Many industries require floor drains.

A huge client tragedy I had a few years ago was with someone opening a restaurant. They were all set up. Inventory bought, menus printed, tablecloths and centerpieces were on the tables. When the city inspectors came, the ventilation hoods did not pass inspection and needed to be replaced. Those costs about $25,000. They didn’t have the money. They had to close before they even opened.

What to do:  Before you lease a business location, have the city inspectors come out to see if it will pass inspection. Inspect before you sign anything.

Health Department

If you are making or serving food or drinks, you will need a license from the health department. Most places do not let you serve prepared food out of your home as a business. Some states have cottage industry laws which allow you to make and sell certain things from home.

What to do: check with the health department in your county to be sure you are following all the laws. 

Business License

Many cities also require a business license in addition to the occupancy permit and health department permits. Your city may require home-based businesses to register for a business license. Most cities in my area do.

What to do: Check to see if you need a city business license (even if you work at home).

Zoning

Zoning is how localities decide how to keep neighborhoods safe and keep industrial areas out of family neighborhoods. I had another client that had been a mechanic his whole life and wanted to spend retirement fixing cars at his house. He built out his garage with a lift and all the fancy gear. However, his cul-de-sac full of families with small children didn’t want the noise, the extra cars parked in the cul-de-sac, and customers coming and going at all hours. You don’t always get to do whatever you want on your own property.

Generally, you cannot have customers coming to your home. You cannot have a bunch of stuff in your driveway. You cannot have tractor trailers unloading in front of your house and blocking traffic and you can’t make a lot of noise. If you are bothering your neighbors, they can complain to the city and the zoning board can shut you down.

Even your business neighbors can complain. If you rented a store in a shopping mall and you decide to start sanding cars or running loud machines, they could stop you from doing ‘industrial’ activities in a ‘commercial’ location.

If your neighbors complain, you can have an exception made by appealing to the city and having a meeting (including all your neighbors). It is called a ‘variance’.  That is a long process, and you probably need an attorney. Even if you win, you are still stuck with your unhappy neighbors.

Even though this isn’t ‘other taxes’, if you don’t follow the rules, it can cost you a lot of money in legal fees.

What to do: check that what you are doing is allowed by the city in your location before you start your business.  Talk to your neighbors before you ask for any changes in zoning. A little respect and a discount can go a long way.

Other Taxes

But wait, there’s more. If you are selling alcohol, you need a license. Selling tobacco, you need a license. If you are selling lottery tickets, you need a license. Gasoline? License. Vending machines? License. Coin-operated machines? License. Tires? License. Chemicals? License.

There is no end to the other taxes, licenses, and regulations for small businesses.

What to do: Check with your state’s miscellaneous tax division, call the city, or ask someone in your area who knows the regulations.

Most Important: Be sure you can operate your business within the law before you get started.