READ ENTIRE ANSWERYou will not need a business license to claim income on schedule E for state and federal income- BUT read on completely.You may need to resister with the State Sales Tax Department if your business is required to collect and pay sales tax - (most do) and not doing so if you should is against the law. So be sure to call them and find out. If you do you will receive a sale tax certificate of authority. Besides that you may need to file with your county a DBA ( Doing Business As ). Without this DBA you will probably not get business financing from a bank today.Besides that you will need to contact your village or town to be sure you can operate the business in the area. I say that because some zoning laws prohibit some types of business from being in a residential area. Usually home based business where No customers come to the home or where No excess trucks park or No auto repair is being done for example are okay. If you have a web based business it is an example of a business you can operate from home.IMPORTANT!!!!!The reason I say you need to file these other forms if needed is because your federal and state income tax people may or probably will report your schedule E to the sales tax people. And you do not want to get caught not collecting or not reporting your business to the state sales tax people. Big fines!!!!The IRS is not stupid so don t try to claim business expenses without sales income. And don t try to claim income without collecting and paying sales taxes due the state if you are required to. You can only claim a loss in business for so many years to ask a CPA.
From a tax perspective, no business license is needed to claim tax deductions. You should of course check your state and local laws for any local license requirements needed to run a business.I recommend folks document their business intent- this helps show the IRS that you are engaged in a real business. Consider putting a written business plan together, print business cards, advertise, install a business phone line etc. etc.
Use this basic checklist to make sure all the important steps are taken before you launch your new venture. Steps to Starting a Business -http://www.developer-resource.com/starti��Other sites you might find helpful are: SBA - http://www.sba.gov/SCORE - http://www.score.orgSmall Business Resource - http://www.small-business-software.netBusiness Link - http://www.businesslink.gov.uk/bdotg/act��Goodluck!
no a business license is not needed for that. it may be needed for other reasons but not for IRS.your income and expenses will be reported on Schedule E of your personal tax return
