Legal Requirements for Starting a Manufacturing Business

Legal Requirements for Starting a Manufacturing Business

A comprehensive report from CNET revealed the current plight of the country’s semiconductor industry. A global chip shortage prevents companies from manufacturing electronic products from laptops to game consoles. Even the automotive industry is affected.

The global chip shortage has been recently magnified by the holiday shopping season in the country. Consumers cannot get the products they want, leaving both buyers and sellers annoyed. They aren’t the only ones infuriated with the situation, however.

The US government has become exasperated with the country’s reliance on Asian-made microprocessors. As a result, lawmakers are trying to reverse the country’s diminishing significance in the global semiconductor space. On the other side of the equation, local chip makers are investing in chip manufacturing facilities, awaiting additional funding from the government.

In a nutshell, the global chip shortage made the public realize how the US is losing in the chip manufacturing race. Intel, the famous American-owned microprocessor maker, has fallen behind three times as a leading chip maker since the pandemic.

What Entrepreneurs Can Do to Help

While there’s nothing you can do to improve the chip shortage exponentially, you can do your part by establishing a manufacturing company right on the country’s shores. It doesn’t necessarily have to be a chip plant. They are expensive and time-consuming to build. Intel has recently started to build two-chip

fabrication plants for $20 billion, and it will not start producing chips until 2024, according to CNET.

However, what you can do as an entrepreneur is to create a business that will make local stuff. But, you have to consider legalities.

According to the US Chamber of Commerce, acquiring licenses and permits for starting a business requires companies to follow specific municipal, county, state, and federal requirements. Fortunately, they provided a quick guide that can help you understand how the process works. Here are a few pointers from the US Chamber of Commerce.

Licenses and Permits


A license is granted to an individual who has taken a test to demonstrate proficiency in a specific trade. Your business will need a license if you will employ professionals that the government regulates. However, there are states that require a license for specific professions, while others don’t.

A permit, on the other hand, is granted after an inspection has been made on a business facility to regulate public safety. Different government agencies issue it depending on the type of business you’ll put up. Cast stone manufacturers, for example, need permits from the Environmental Protection Agency (EPA) to regulate the wastewater they produce.

However, both licenses and permits differ per city and state. You also have to consider federal licenses and permits for businesses. At the local level, cities and counties often require a tax registration certificate. A state tax permit and licenses for specific professions are required on the state level. The federal

government meanwhile, requires permits and licenses if your business is regulated by a federal agency.

Business Entity and Business Name

It would be best if you chose which legal structure your business will adopt. It can be either a corporation, limited liability company, sole proprietorship, or non-profit organization.

You’ll need to register your business with the state if you’ll start as a corporation, non-profit organization, or a limited liability company. You don’t need to register if you’ll start your business as a sole proprietorship. Local agencies, however, will require you to.

As for the requirements to register, both local and state agencies have different terms and conditions that depend on the business entity or business legal structure that you will choose.

Upon registration, you have the option to choose a different name for your business apart from your personal name, which is called a DBA, or “doing as business” name. It is also referred to as an assumed business name, trade name, or fictitious business name.

Should you choose to use a DBA name, you need to register it at the local and state levels. In some states, DBA names should be filed publicly to protect consumers. However, not all states require registration of DBA names, whether privately or publicly.

Tax Identification Number

You also need to get your tax identification number, the Employer Identification Number (EIN) or Federal Tax Identification Number, from the Internal Revenue Service (IRS). You need to get a state tax identification number from the Department of Revenue or related agencies at the state level.

Make Informed Decisions

There are many other considerations that you should factor in when starting a business. Before launching a business, you can also consider talking to a lawyer, accountant, business consultant, or local economic development agency. A legal expert can help you fulfill legal requirements for starting a business.

This is a critical process that can lead to fines and postponement of your launching. At best, inform yourself of the basics, such as the ones above, before speaking with a legal expert.

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