Opening a business as a sole proprietor is the quickest way to achieve lift off! ….Because, there is no business entity to create. In legal and tax terms, you and the business are the same. You simply to need to apply for some licenses, and possibly some permits.
(Not sure if you want to be a sole proprietor? Read Sole Proprietor or LLC: Which is Best for Me?)
Making things official is a great way to build momentum. I encourage you to get your licenses at any time! You can work on the other things later.
Let your dream take flight! (Is that too many metaphors?)
Pro Tip: Get a journal to record all your log-ins, passwords, IDs, and various notes as you go through the process. Use in the future for all research and calls related to taxes and licensing. Read more in Make Your Life Easier! - Simple Tips For Keeping Track Of License And Tax Stuff
1) Optional ~ Apply for an EIN
EIN stands for Employer Identification Number. It's a tax ID number assigned to businesses by the IRS. If you are a sole prop or a single-member LLC, you are allowed to use your SSN for business purposes. Having said that, banks and online forms will often required you to have an EIN. The issue is that the number formatting is different. With your social security number, it looks like 000-00-0000. With an EIN, it looks like 00-0000000.
Good news! It's easy, free, and only takes 10 minutes. Here's the link: Get EIN on IRS.gov. Or, go to IRS.gov and search for EIN. Heads up, this web service is only available during the daytime.
The new business license application portals - for both the city and state - ask for your EIN or FEIN … so it’s a good idea to start with this step first.
2) Apply for your state business license.
Through: Washington State Business Licensing Service (BLS)
Uses MyDOR portal.
Click here to go to read more information on the BLS.WA.gov site
Cost: $19 plus $5 for each DBA
Time: 15 - 20 minutes
3) Apply for your city business license.
Through: City of Seattle Business Department
Uses the FileLocal Portal.
Click here to read more on the city’s website
Cost: $120 for standard, $59 if you plan to gross under $20K per year.
Time: 15 - 20 minutes
That's it! You're in business. …but you're not quite done. To be legal, you need to ensure that you have all of the special permits and licenses for your line of business.
4) Do your due diligence.
At the state level, check the List of Licenses
This is a list by trade, with links to relevant licensing agencies.
Here's the list of Endorsements required by some businesses.
Or, call the BLS: 1-800-451-7985
And, at the city level, check the Regulatory Endorsements page.
Or, call the City of Seattle: 206.684.2489
Another nice tool is the WA Business Hub. It's created to walk anyone through the setting up a business. There's a TON on there.
5) Celebrate!
* * Please note: The intent of this post is to get you started! And, to provide you with the required framework for every business. Your field may require additional permitting or specialty licenses not covered here. For best results, call the city or state, numbers above.
Happy Working,
Jenny
Some Helpful Details
For the State Business License
Some things you'll be asked:
• what bank you'll be using
• your SSN and your partner's SSN
• description of your business: 1- 2 sentences
• trade name(s)
• which cities you'll be doing business in (you need a license for each one)
For the City Business License
Some things you'll be asked:
• the UBI - it is your Unified Business Identifier, you'll get this with your state license
• estimated income
• note: your legal business name will be the same as your name, to get a different name, you need to by a DBA, doing business as, also called a trade name. They are $5 each.
Photo Credit: Design for a Flying Machine by Leonardo da Vinci - http://www.drawingsofleonardo.org. Licensed under Public Domain via Wikimedia Commons