Starting a Small Business — What do I need to know about permits, licenses and sales tax?

I’m starting my own small business providing carpentry and drywall services. Do I need to charge sales tax? What kinds of permits or licenses do I need?

It is always a good idea to plan ahead when starting or expanding a business.

“As a contractor working on your own, there are many requirements and risks that you need to be aware of,” said Attorney Greg Bonney.  “It is good to think ahead.”

Generally, a sales tax is  due in Wisconsin on the sale, lease or rental of personal property or on taxable services at retail in the state. It is assumed that any sale of personal property is sold at retail; it is not taxable if sold for resale.

While improvements to real estate are generally not subject to tax on the final product or labor,  sales tax is paid when  materials are purchased for the project. Sales taxes are generally passed on to customers as part of the cost of materials. If sales tax is incorporated into materials’ charges, sales tax is not added to the total bill. 

You will need a seller’s permit to sell personal property or taxable services in Wisconsin.

Also, if you have workers in your business, you need to make sure you have the appropriate employer numbers from the Internal Revenue Service and from the Wisconsin Department of Revenue to withhold taxes. You also must meet the requirements of workers’ compensation and unemployment compensation laws.

“Finally, before you can work in a city, village or town, check with local officials concerning necessary permits and licenses, including building permits,” Bonney said.

More information is available from Bonney at 608-784-5678. The Wisconsin Department of Revenue Web site, http://www.revenue.wi.gov/html/business.html, also offers further information about sales tax and permits; an accountant is also a good resource in determining the various requirements.