Start a Business Forms
Business License and other Local Requirements

Each city's business requirements vary. The following is a general description of these requirements.

Before you sign a lease or purchase equipment:

  • Verify that your proposed location complies with zoning requirements (including parking requirements and fire regulations).
  • Find out from the city building department if there are any code compliance issues.
  • If you are preparing food, talk with the County Environmental Health Department to verify that they will allow you to use existing equipment and facilities.

Zoning Permit   Usually you only need to get a zoning permit if you are changing the use of a building or if you are starting a home occupation business. Cities charge a nominal fee for home occupation permits ($50 is common). However businesses which want to change the existing use of a building may pay a fee, depending on the complexity of the request.

Business tax/license   Most cities require anyone who conducts business in their city to obtain a business license and pay a business tax each year. The initial business license fee is usually the minimum business tax plus an administrative fee. In future years, the business tax is based on gross receipts, number of employees, or other criteria. The exact criteria depends on your type of business and your city's policies.

Home occupation permits    Home occupation permits are usually issued by the Planning (or Community Development) Department and are required before you obtain a business license. Business owners must agree to comply with the city's home occupation restrictions. These generally include:

  • No visible sign of the business
  • No altering the home
  • A space limit for the business (example, 25% of the home)
  • No employees
  • No large deliveries or significant storage
  • Off-site parking for vehicles
  • No hazardous materials
  • Limitations on what business you can operate (example, no barbershops)

Contact the Planning Department for a complete list.

Sign permit    Many cities regulate the size, color, placement and number of signs you can display. This includes temporary signs and "sandwich boards" placed on the sidewalk. They may also require a building permit to install permanent signs. In general, home businesses cannot have business signs.

Other necessary permits    If you are making renovations or want to put a planter outside your door, chances are that you'll need a sign or building permit.

Fire inspections    Commercial buildings are inspected annually by the fire department. This service is generally free except for restaurants, bars, theaters, and other places of public assembly, which may be charged an annual fire permit.

Handling food    If you handle food in any way, you'll need a Health Permit. This is typically issued by the County Environmental Health Department.

Questions?    Please contact your local city or county.

How to Select a Business Name

This link gives many creative and thoughtful ideas for developing a business name. It is on a commercial website which contains advertisements, but we included it because this information is not available from public or non-profit sources.

<How to select a business name

Risk Assessment

How risky is your business... and how do you respond to risk? Take this risk assessment prepared by Minnesota Center of Rural Entrepreneurship (CORE) to find out.

Click here for a risk assessment quiz

Some warnings about being in business

Once you are in business:

  • If you work on your own, it is difficult to get individual health insurance if you have any medical issues. You need at least two people to qualify for group health insurance (which does not require a physical examination).
  • It will be difficult to apply for a house loan because your business income cannot be verified.
  • Taxes can cause you to go in circles. There is a temptation to have as many write-offs as possible to lower taxes, but this will hurt you if you want a loan. Yet if you show high income, you have to pay about 40% of that income in taxes - which is difficult, especially if you are seeking a loan.
  • Taxes can shut you down if you fall behind in payroll taxes.
  • If you get disabled (for example: back injury), there is no safety net.
  • You are at the mercy of your customers' pay cycles. Cash is king - more than sales or profit.
  • Surviving while you grow to a sustainable level is tough. Your business is like a car going from 0 to 60 mph. At 60 mph, you know your business can make it. But you have to get there. Unfortunately, you have to pay taxes (about 40% of your profit) before you get there - so the journey is harder.
  • If you can't sell, find someone who can or don't go into business. Business success is all about sales and networking.
  • If you work alone, you may find yourself isolated, with no support, unless you go find it.
  • If you work at home, there is often no boundary between "work-time" and "home-time" and both can suffer.
  • You may be fighting the "status quo". Having a better product, even at a better price may not be sufficient to make a sale. Your customers have to be convinced to change their behavior and buy from you.
Sole Proprietor

Sole proprietors are owned by one person and are the most common type of ownership.

Sole proprietors are personally liable for business debts. This means if your business fails and you have unpaid business debts, you must use your personal assets to pay the debt.

Also, your business credit and your personal credit are the same, which is fine if they are both good, but a problem if either are bad.

When you fill out contracts, the legal name of a sole proprietorship is the owner's personal name. By identifying yourself as a sole proprietorship, others may think that your business is small.

Despite these drawbacks, forming a sole proprietorship is the simplest and least expensive business type.

Form Sole Proprietorship

Here are the forms to make your business legal. When you have completed this paperwork, you are ready to open a bank account, lease space, and sign any contracts.

If you have any specialized leases or contracts, you will need to find a business attorney. You should also review your business risks and determine whether you need business insurance or whether you need to trademark, patent, or copyright elements of your business.

Forming a Business Entity


Obtaining Licenses and IDs

  • Federal ID: SS-4 form. A federal ID is not required for sole proprietors, but it is a good idea to get one to protect your personal identify. You can use this number instead of your social security number for vendor applications and other requests.
  • Business License and other local Requirements
  • Get a D&B number This is optional, but recommended because D&B information is used by global tracking (Google Maps) to help people find you and it is used to track business credit.

Protection

If you are thinking of starting a business, this is the place to be. We have resources to help you go from idea to opening your business.

The first button for micro-businesses gives some links to information about running a business.

The second button helps you to evaluate your business idea - to determine whether it is a go or no-go.

If it's a go - we have a button to help you choose the best location for your business.

When you're ready to start, the Starting your Business button has tools to choose an entity and all the forms to create that business entity.

Don't start without a business plan. We have links to help you, as well as links for free one-on-one help.

Finally, we have other resources that will help you avoid common business problems.

Limited Liability Company

LLCs were developed to give people the flexibility of partnerships with the liability protection of corporations. Corporations have strict rules regarding annual meetings and minutes, which can be a nuisance to small corporations. LLCs do not have any of the corporate "formalities". Yet they have the same liability protection that corporations do. Because of that, they have become a very popular business entity choice.

Before forming an LLC, check to see if there is a minimum annual tax for LLCs and compare it with any minimum taxes for corporations.

Like corporations, forming an LLC will not protect business owners from actions that they do themselves, from tax debt, or from personally guaranteed debt.

LLCs are popular entities if your business has more than one person doing the work or you want to protect smaller stakeholders from business debt.

Form an LLC

Here are the forms to make your limited liability company legal. When you have completed this paperwork, you are ready to:

  • Open a bank account
  • Lease space
  • Sign any contracts.

If you have any specialized leases or contracts, you will need to find a business attorney. You should also review your business risks and determine whether you need business insurance or whether you need to trademark, patent, or copyright elements of your business.

Forming a Business Entity


If you are thinking of starting a business, this is the place to be. We have resources to help you go from idea to opening your business.

The first button for micro-businesses gives some links to information about running a business.

The second button helps you to evaluate your business idea - to determine whether it is a go or no-go.

If it's a go - we have a button to help you choose the best location for your business.

When you're ready to start, the Starting your Business button has tools to choose an entity and all the forms to create that business entity.

Don't start without a business plan. We have links to help you, as well as links for free one-on-one help.

Finally, we have other resources that will help you avoid common business problems.

Corporation

Corporations provide limited liability protection to the business owners. This means that if the business fails, the business owners do not have to use their personal assets for unpaid business debt. This limited liability protection does not apply to taxes.

Before forming a corporation, check to see if there is a minimum annual tax for corporations and compare it with any minimum taxes for LLCs.

In practice, incorporating does not protect owners from acts that they do themselves. That is because people can sue both the corporation and the person individually. Also, incorporating does not protect owners if they guarantee debt. Most lenders require the major shareholders to personally guarantee debt. By incorporating, the smaller shareholders are protected, but not the larger ones.

So overall, incorporation makes sense if other people (employees or partners) will be doing some of the work or you have smaller shareholders that you want to protect from debt.

There are S corporations and C corporations. This is a tax designation only. Normal corporations (C corps) have their earnings double taxed. First the corporation is taxed. Then profit is distributed to shareholders and shareholders pay tax on those dividends. S corporations were developed so that earnings are only taxed once.

However, S corporations cannot offer incentive stock options to employees.

Form a Corporation

Here are the forms to make your corporation legal. When you have completed this paperwork, you are ready to:

  • Open a bank account
  • Lease space
  • Sign any contracts.

If you have any specialized leases or contracts, you will need to find a business attorney. You should also review your business risks and determine whether you need business insurance or whether you need to trademark, patent, or copyright elements of your business.

Forming a Business Entity


If you are thinking of starting a business, this is the place to be. We have resources to help you go from idea to opening your business.

The first button for micro-businesses gives some links to information about running a business.

The second button helps you to evaluate your business idea - to determine whether it is a go or no-go.

If it's a go - we have a button to help you choose the best location for your business.

When you're ready to start, the Starting your Business button has tools to choose an entity and all the forms to create that business entity.

Don't start without a business plan. We have links to help you, as well as links for free one-on-one help.

Finally, we have other resources that will help you avoid common business problems.

Partnership

Partnerships are owned by more than one person. Each of the partners is personally liable for the business' debts. Much like a marriage, each partner is responsible for the others' actions, even if they did not know what their partner was doing. This works if both partners are equally responsible and have equal ideas about risk. If this is not the case, a partnership can be disastrous. For this reason, partnerships are less desirable business entities.

Partnerships are inexpensive to form and unlike corporations or LLCs, there is no minimum tax.

Form a Partnership

Here are the forms to make your partnership legal. When you have completed this paperwork, you are ready to:

  • Open a bank account
  • Lease space
  • Sign any contracts.

If you have any specialized leases or contracts, you will need to find a business attorney. You should also review your business risks and determine whether you need business insurance or whether you need to trademark, patent, or copyright elements of your business.

Forming a Business Entity


If you are thinking of starting a business, this is the place to be. We have resources to help you go from idea to opening your business.

The first button for micro-businesses gives some links to information about running a business.

The second button helps you to evaluate your business idea - to determine whether it is a go or no-go.

If it's a go - we have a button to help you choose the best location for your business.

When you're ready to start, the Starting your Business button has tools to choose an entity and all the forms to create that business entity.

Don't start without a business plan. We have links to help you, as well as links for free one-on-one help.

Finally, we have other resources that will help you avoid common business problems.

Non-Profit

Non-profit organizations or non-profit corporations are set up to provide services to either members or the general public. There are two primary categories: 501c(3) and all the others. 501c(3) non-profits serve the general public and donations to their organization are tax exempt. Contributions to the other non-profits are not tax exempt.

Non-profits have annual reporting requirements, must have a board of directors with outside board members, and have major restrictions on their revenue activities.

If your goal is to contribute a percentage of your profits to a non-profit or charitable cause, you are not a non-profit; you are a regular (but generous) business which gives charitable contributions.

Independent Contractor

Independent contractors are actually sole proprietors, but they often don't consider themselves "a real business", so we are talking about them separately.

Independent contractors usually work alone and often are paid under their own name, rather than a business name. Independent contractors are hired to accomplish a specific task - and it is up to them as to how, when, and where to do it.

Independent contractors are in business form themselves, so they are responsible for their own taxes - and unless they have incorporated or formed an LLC, independent contractors are sole proprietors.

Unfortunately, the distinction between an independent contractor and an employee can easily be blurred - by either the worker or the hiring company. The IRS fines the hiring firm if the worker is actually an employee. The IRS will fine the independent contractor if taxes (including social security self-employment tax) are not paid.

Warning: Independent contractor status has nothing to do verbal or written agreements between the worker and the hiring company. You can ONLY be considered an independent contractor if you are truly in business for yourself, take business risk, and meet virtually all of the 20 IRS factors below.

Forming Your Business Out-of-State

You are probably familiar with companies that will form a corporation or LLC out-of-state. While this is certainly legal, you should be aware of some of the downsides:

  • Officially, you are required to register as a "foreign" corporation or LLC with your Secretary of State. Foreign corporations and LLCs must pay the same taxes as domestic businesses, so you will not save any taxes.
  • You must allocate earnings according to the state where the revenue was earned, which will result in more complex tax returns and increased tax preparation fees.
  • If you decide not to voluntarily register with your Secretary of State, you will be required to register when you hire employees or sell items.
  • Foreign corporations and LLCs cannot get Small Business Certification to sell to the State.
  • It violates the "think globally, buy locally" mantra. When companies pay taxes and fees to other states it places a higher burden on everyone else.
Small Business Development Centers

Small Business Development Centers are part of a national network of organizations dedicated to helping people start and expand their business. Funded by the SBA and some local cities, SBDCs provide free one-on-one counseling and low cost workshops.

Your local SBDC is:

Business Development Center at Clackamas Community College
Milwaukie
503-594-0738
https://clients.bizcenter.org/center.aspx?center=2040&subloc=0

Daily Email Small Business Marketing Courses and E-Books From Famee Foundation

The Famee Foundation provides free small business marketing courses and e-books. Participants receive a daily email with a short reading assignment or activity. The basic courses include:

  • 31 Day Marketing Primer for Startups
  • 14 Day Quick Marketing Plan
  • 26 Week Implementation Program

The mastery courses are based on a free e-book and workbook, called Customer Pillars. The courses include:

  • Chapter a Week Course
  • Mastery Pillar 1: Focus on Growth Customers
  • Mastery Pillar 2: Maximize Value Incrementally
  • Mastery Pillar 3: Refine to Perfect Pricing

Click here for more information.