If you're thinking of starting a company -- whether through a retail store, your house, or online You've likely been told about permits, licenses and registrations. However, one thing that can makes new business owners nervous are that of the the Business Tax Certificate that is also known in a variety of regions as the business License, Occupational Tax Certificate as well as a business registration Certificate.
What is it and when should you get one? This article explains the fundamentals of tax certificates, and what you need to know about when your business needs one.
What Is a Business Tax Certificate?
It's a Pro Renewal Services INC A Business Tax Certificate is an official legal document given by your county or city which grants you the legal authority to conduct a business in that area. In spite of its name it's not directly connected to income tax It's an local revenue obligation that is designed to:
Businesses that are active in the region.
Make sure that local tax collection is a part of businesses
Keep zoning and safety documents current
It's usually necessary in conjunction with other permits or licenses (like the LLC's registration, or Seller's Permit).
When Do You Need a Business Tax Certificate?
Although the requirements differ based on the local government you are working with generally, you will require the Business Tax Certificate If:
1. You're Operating Any Business in a City or County
If you sell services or products to make a profit You'll likely have to sign up with the local government. This could include:
Brick-and-mortar stores
Home-based companies
Online companies (if you are operating from your home and selling local)
Consultants, contractors and freelancers
Even part-time business as well as side ventures could require a license.
You're Starting a Business in a New City or County
If you're expanding or moving your business to another location, you'll need to register at the local level no matter if your business has been registered in another location. The majority of cities require local documents for tax and zoning reasons.
You Have a Physical Presence or Employees in a City
If you set up an office or store, or employ workers in a cityeven for a short period of time you'll likely need to obtain a tax certificate for the particular area.
Your Local Jurisdiction Mandates It by Law
In the majority of U.S. cities and counties, having a business tax certificate is required regardless of income or size of the business. In the absence of a tax certificate, you could end up in:
Penalties or fines
Orders for business closures
Refusal any other permit (like signs permits or food handling permits)
When You May Not Need One
While the majority of businesses require an official certificate, some businesses may be exempt based on the location and the nature or work. There is a chance that you won't need one in the following situations:
Your business is completely outside the city boundaries (e.g. remote-only without clients or customers within your jurisdiction)
You are able to be classified as a non-profit with specific proof
You're an certified professional (e.g. lawyer, doctor) with a state license that can be able to override local licenses (although many require registration in a local area.
Always confirm the validity of you local clerk of the city or the local office of business licensing The exemptions are extremely rare and specific to each case.
When Should You Apply?
In all locations, you need to file for a tax-free business certificate prior to beginning your business. Certain cities offer a limited time-frame for grace (e.g. 30 days) however, most require you to file a tax return in advance.
Be aware that certificates are often required to be renewed every year typically before the expiration each calendar year, or upon one year anniversary from the date you made your initial registration.
How to Get a Business Tax Certificate
The process is generally simple:
Visit your city or county's business licensing department (online or in person).
Fill out the form by providing your company's names, addresses, type and the structure of ownership.
Pay the cost and the amount varies depending on the location and type of business (ranging between $25 and hundreds of dollars).
You must wait for approval This could be a couple of days or some weeks.
After approval, you'll get your certificate and then you're legally able to conduct business.
Final Thoughts: Don't Skip This Step
It's a must. Business Tax Certificate may sound tiny when compared with the formation of an LLC or requesting an EIN However, it's an essential aspect of ensuring compliance with the law. If you don't, it could cost you many more dollars in penalties and missed opportunities or legal troubles than the small effort needed to remain legally compliant.
Need Help Figuring Out What Your Business Needs?
We are Pro Renewal Service Inc. We assist businesses both existing and new with licensing renewals, permits, permits and filings -so that you're protected, well-informed and complied.
