Every city and town in the USA will most likely require you to get a license for your business. Check your state and local municipal websites or call your local licensing department to see what they’ll require.
Some states require a state business license, others don’t. In some states having the state licenses precludes you from needing a local license, in some states you need one or the other, in some states you need both. Some states and municipalities require additional licenses for one time events, others issue “mobile vendor” permits, others only require the state or local permits.
Why is Getting Business Licenses such a pain?
CONFUSED? ME TOO! This is one area where you need to do your homework. For the town where I am located, I need a local business license to conduct business on my spot-state licenses aren’t required. In neighboring communities, the state license is accepted in lieu of a local license, provided I am in a properly zoned area. Other communities require the State License to obtain local licenses! I get the state license anyway to avoid paying local fees in some communities and in case I book an event where state licenses are required for local permitting, but I hold four local licenses as well!
The rule of thumb here is this: If a city, town or state can extract money from you for a permit, THEY MOST LIKELY WILL. Find out what licenses you’ll need and get them. It’s a pain in the neck, but if you don’t, you won’t be in business very long!
Another permit/ license you will need is a sales tax license/ID if you are in a state that charges sales tax. Don’t mess with this one-the most efficient arm of any state government is the revenue department! They will find you and they WILL want their sales tax money. Make sure you keep good records and either charge the sales tax or build it into your pricing. PUT ALL SALES TAX MONEY IN ITS OWN ACCOUNT so you won’t spend it and report it at the appropriate time. Believe me, you have to pay sales taxes-there is no way around it.
You’ll also need a standard tax ID from your state. This would have a business tax ID number on it if you incorporated or your social security number if you are a sole proprietor. Most municipalities will require this tax ID in one form or another. This is just another way of the state and federal government to track you and your business for tax purposes. You should get the advice of an accountant on the best way to organize your business with regards to your income and business tax situation. If you only seek one piece of professional advice when starting your hot dog business, SEEK THE ADVICE OF AN ACCOUNTANT! The money they will save you and the potential financial liabilities you could incur if you mess this piece of your business up make an accountant’s services PRICELESS. If you are reasonably savvy with numbers, consider doing your taxes yourself with Turbo Tax.
Another thing to consider before seeking permits is how your hot dog business will be organized. Many vendors opt for the simple sole proprietorship option, but you may want to consider incorporating. Incorporating your hot dog business protects you better should someone get hurt or sick from your cart. By incorporating, you protect your personal assets (like your home) should someone decide to sue you. Incorporating your hot dog business is fairly inexpensive and it could also save you some money on insurance costs.