Starting a cell phone business, be it out of the home or a commercial location, is going to take a lot of work.
An LLC is an agreement on the rules, structure and practices by which your new legal person, which is what the final LLC agreement is, will be conducted. In that it is a new person, it allows you to seperate yourself from the actual business affairs and reap the benefits while dodging the consequences.
To be simplistic, which is helpful, your Federal Tax ID is your LLC's social security number. Your filing date is your LLC's date of birth, you are the parent, and the name you choose is, obviously, the name. But the federal tax ID is the social security number, and the only thing keeping it in the IRS sytem.
Your Federal Employer Identification Number is a registration number with the IRS establishing with them that your LLC is an employer, and that the relationship you have with your employees is one of employer/employee. Without it, they are legally barred from making that assumption.
When you get a State Employer Tax ID it not only opens your withholding account, issues you your number and gets the state to issue you a lot of employee related paperwork, it also actually makes it legal for yout to have employees, which is something of a plus all things considered.
Your Sellers Permits does two things. It opens the account into which you pay your yearly charged sales tax dues, which you do not want to fall behind on keeping track of, as figuring them out after the fact is excruciatingly difficult, it also saves you a mountain of cash in wholesale purchases.
By filing for your Local Business Tax Registration, aside from avoiding the headache of late filing penalties, you also certify the legality of your business, ensure that you are current with you local taxes, and also line up for any possible local business incentives, which are not to be underestimated.
Even ignoring the contracts required with the cell phone companies, which is a lot to ignore, you are going to be forced to deal with the government at every level to run your business above board.
To start a business with as many contracts as a cell phone business is going to need, an LLC is simply the only way to fly at the outset. Providing broad legal protection that is essential when dealing with hopefully hundreds of contracts, each one a potential legal liability, anything less is simply suicide for your business.
Once you have your LLC, you need to get a Federal Tax ID, or your business is a legal Claude Rains, in that without it, the IRS simply won't recognize the existance of your LLC, and you won't be able to file tax returns, tax returns they will be expecting. And they tend to be somewhat unpleasant on that subject.
Assuming you have employees you pay, you will need a Federal Employee Identification Number. Otherwise, while the IRS will recognize that your employees are employed, they will not recognize you as having them, and will want the money you payed in wages come tax day. Money you don't have presumably.
Next is the State level. Now that you have employees, you have to pay witholding tax. Unless you have your State Employer Tax Id, you can not do this. While the IRS will not care, the state will. Even presuming you somehow manage to pay your witholding tax, this will not happen, without your ID, you can not prove you did.
Your Sellers Permit is a joy rather than a chore. Once you have it, you can buy your product, in this case cellphones, from wholesalers, tax free, and sell them to customers for more, in this case with sales tax. You don't get to keep the sales tax, but you can't deny the joy of of that little added number on every sale.
Once all of that is out of the way, you must register locally. Not only is this registration a tax registration, it is also the citiy and counties way of saying that your business as you are conducting it, and where you are conducting it, is legal. Of note is the fact that every location you open requires a seperate license.
00 - Since you are selling taxable items, here are the licenses and tax ids you are legally required to obtain before starting business operations:
1. A business tax registration license
2. A limited liability corporation agreement
3. A federal tax id number
4. A seller's permit.
5. A state employer tax identification number.
6. A federal employer identification number.
You can obtain all these licenses and more online at www.businessnameusa.com
Simply fill out our online questionaire, complete our business information form in full, leaving only those questions to which you do not possess the answers blank, and then complete our payment form and we will begin processing your order imediately.
www.businessnameusa.com
P.O. Box 14927
Long Beach, CA. 90853
310-455-6675
Assuming the above reasons are unconvincing as to why you need an LLC, let's try this one:
As an individual, filing for a DBA, if one of your phones is mishandled by an employee, or even sabotaged, and as a result, there is personal or property damage, you are responsible. If you file for an LLC, the LLC is responsible, the LLC being a nonexistant legal fiction.
As for Federal Tax IDs and Federal Employee Identification Numbers, failure to obtain them both bring you into conflict with the same entity. The IRS. This is generally considered a bad idea. This is so much of a bad idea that it is used as a way to jail mobsters that are otherwise impossible to jail.
This brings us to State Employer Tax Identification Numbers. It's true that no one is really afraid of the Indiana Departement of Revenue, but failure to pay witholding tax is one of the top reason people sue their bosses, as it affects your employees as well. And they will win. Just look up the last defendant online. See how things went.
Now as for the Sellers Permit, I could tell you about the massive, and complicated fines you could face if you don't get a sellers permit, but tat's not really the point. The point is that a sellers permit saves you money. A lot of money. Wholesale prices are fantastic, and you can't get them without a Sellers Permit.
Business Licenses are often overlooked, much to the eventual downfall of the business concerned. Not only do you face fines, penalties, and back taxes when you fail to register, but you also face misdemeanor charges from the police, which invites the exciting possiblity of being arrested in front of customers.
The total cost of all these permits is $799.93. Perhaps the lowest fee in the web today.