Week 3 - Registering Your Business and Obtaining Your Permits

A lot of entrepreneurs struggle with the details.  You're a big-picture thinker... a visionary.  You see where you will end up.  You have no idea how you're going to get there, but you know where you'll be when the dust settles.  For these reasons, this very well may be your first big test because it may be the first "businessy" thing you have to do.  Registering your business and figuring out what permits you need in order to operate can seem like a daunting task.  Don't be intimidated, it's actually easier than you are probably thinking.  First things first, you need to register your business with the state.

1) Registering Your Business With the State

First things first, you should decide how you plan to structure your business.  Most small businesses begin as a Sole Proprietorship (DBA) or a Limited Liability Company (LLC).  However, if you are planning to have employees as soon as you open it's a good idea to seek out an accountant and lawyer to help you decide how to structure your business.  They will tell you your best option to protect your personal assets, as well as help you choose the option that will offer the biggest tax benefits for your business.  Your state's Office of the Secretary of State can also help you decide which entity is right for you.  At the very least, check out a site like LegalZoom.com for help.  Since we were a one-person operation for when we started, we chose to file as an LLC because of the protection it offers for our personal assets.  

Once you've decided on a structure, head over to your Secretary of State website to file your Articles of Incorporation (also called Certificate of Formation).  You'll want to have a company name picked out, a structure, your SSN, a business address, information for any additional Agents or Directors, etc.  We filed as an LLC in Texas, and it cost around $350 for the Articles.  Pro tip: before you file, do a name availability search.  This will save you from having to file a name change later.  If you decide you want to change your company name or address, you can always head back to the same site and file an amendment for a fee.

2) Filing for your Federal Tax ID/EIN

Now that you've filed with the state, you'll need to file with the Feds at the IRS website.  You'll probably get your paperwork from the State within 2-4 weeks.  Once you have it, you're ready to file with the Feds.  Good news, this was actually easier than filing with the state.  Have your new state paperwork handy, and you'll be able to pull most of the needed info from it.  

3) Permits

By far, this is the part that caused me the most stress.  You just don't know what you don't know.  I could go in to a lot of detail that is specific to food, but instead we'll just keep an overview of some general things we learned through our process.  

 Let's divide permits into 2 sections: building/construction permits, and industry-specific permits.  

Building/Construction Permits

If you are doing any sort of renovation/construction/build-out on your space, you are going to need to visit the city to obtain some sort of permit.  We are in a 100 year old building in a historic part of town, so we had to get approval FOR EVERYTHING.  Here are a few examples of things you'll need to get a permit for: driveways, adding/altering parking, adding/altering signage, fence alteration, water or sewage lines, adding/changing electrical, adding natural gas, tree removal, etc.  If you can afford it, get a solid contractor (and there are a lot of bad ones out there) who has done a similar project, and is familiar with how to obtain the proper permits in your city.  They should be able to take it and run with it, allowing you to focus on other things.  If you are doing the work yourself, make sure to sit down with the City Building Inspector BEFORE YOU START CONSTRUCTION to discuss which permits you'll need.

Industry-Specific Permits

Some industries require other permits.  In the food manufacturing industry, we had to obtain a Food Manager's license (classes available online), and a Food Manufacturer License from the State of Texas.  If we were a Food Service Establishment (fancy name for a restaurant), we would need a different set of permits.  The best thing to do here is to call your city health department first.  Tell them what you want to do, and ask which permits you need to apply for.  Ask them to send you a list of the proper permits. Be nice to them, and they will be willing to help you. You should also ask them if you need any additional permits/licenses from the county or the state.