New York Small Business Law

What licenses do I need to start an Online Business?

"Starting an Online Business: Licensing Requirements" caught my eye the other day.  I would like to add my own two cents to this topic from a New York perspective.

An online business is no different from any other business when it comes to licenses and permits.  Depending on the type of business you conduct, online or offline, you may need certain permits and licenses from three different authorities: the Federal Government, your State Government or your local authorities.

Federal Government permits and licenses are rarely necessary, except for certain types of rather dangerous activities, like drug manufacturing, selling of alcohol and firearms and so forth.

On the state level, as a New York business, you can find out what kind of licenses and permits are required by going to New York's Online Permit Assistance and Licensing web portal, short OPAL.

On OPAL, among the many choices of different business types, there is one type of business labeled "Online Retail Business."

If you go through the questionnaire, you will find out that you need to obtain a Certificate of Authority to Collect Sales Tax.  OPAL also advises that the sale of certain goods may require additional licenses and suggests that you contact GORR (New York State Governor's Office of Regulatory Reform) at 800-342-3464.

On the local level, as a New York City business, you can find information about permits and licenses here.  As far as I can see, they do not require any particular license for the sale of new goods on the internet.

With respect to using your home as a home office in New York City, I wouldn't worry about any permit or license, as long as your business doesn't disturb your neighbors.  But if in doubt, you should consult the New York City Zoning Code, or your town's zoning code, if you don't life in NYC.

By the way, don't hesitate to call all State and City agencies and ask your way through to somebody who seems knowledgeable and get all the information you need.  While there is no guarantee that people give you correct information (is there ever?), these government employees are being paid to help you (for free) and are often very helpful.

Then there is other paperwork that a new business may need to file, even though I wouldn't call that a permit or a license.

For example, corporations and multi-member LLCs must apply for a federal identification number. 

In addition, any business that conducts its business under a name other than the name of the individual owner, must apply for a "fictitious name certificate" or "business certificate."  In other words, Daphne Danzig selling widgets as Daphne Danzig does not have to get a business certificate.  But Daphne Danzig selling widgets under the name "Ace Widgets" needs to apply for a certificate.  If Daphne Danzig is in New York City, she can get her certificate at the county clerk, 60 Centre Street, for more info see here.  For an entire post on business certificates, see my earlier post on "doing business as".

**This post is for informational purposes only and does not constitute legal advice**

"Terms and Conditions" may work for your Business

If you are in a line of business where you repeatedly have to enter into agreements with your customers and the basic terms of those agreements rarely change, you may want to consider the adoption of "General Terms and Conditions."

Rather than having every contract spell out all terms and conditions, your individual contracts with customers could be rather short and refer to your General Terms and Conditions.

The General Terms and Conditions could contain all the terms of the business relationship that rarely change, such as:

The representations you do or do not give about the quality of your products or services,

the general nature of your goods and services,

when you expect payment for your products or services,

when you or your contract partner are allowed to terminate the contract and the consequences of such termination,

any elements of the price of your goods and services that never change and

all those boilerplate legal provisions you don't understand but your lawyer tells you to put in there anyway.

By using General Terms and Conditions, you standardize a large part of every customer relationship.  The individual contracts with customers would become much shorter and easier to draft and execute.  You just have to make sure that every individual contract or oder specifically incorporates your General Terms and Conditions.  For example with language like this:

"The General Terms and Conditions dated _____ are incorporated into this work order by reference and are a part of this work order as if fully stated herein."   

In addition, you may want each individual customer acknowledge receipt of your General Terms and Conditions, so that there is never any doubt which version governs the business relationship.

You could even consider allowing for changes of your General Terms and Conditions without the agreement of  your customers who are already governed by the General Terms and Conditions.  Be aware, though, that not all changes without proper notice may pass muster with the courts if challenged.  Check out this post by Techlaw on the subject.

The individual contracts could be called anything you want, but terms like "work order," "service order," "project order," "project specifications" may make sense.

Beyond being a time saver, there are other potential benefits of General Terms and Conditions:

You can post your General Terms and Conditions  on your website and give your customers immediate access to what a contractual relationship with you would look like;

You can create the appearance that your General Terms and Conditions are non negotiable and deter your customers from trying to change the terms of the business deal.  While you and I know that every contract is negotiable, for some reason many people think that General Terms and Conditions are set in stone.

**This post is for informational purposes only and does not constitute legal advice**

How to use Special Terms in your LLC's Name

As you may know, there are naming rules (Section 204 NY limited liability company law) when it comes to choosing a name for your LLC.  Most  names are o.k. if not already taken by somebody else, but some terms are tricky and require special dispensation.

For example, try filing articles of organization for this LLC:  "Life Exchange, LLC".  You will get a nice letter from the Department of State informing you that they are unable to file this name, because it is not allowed to use "exchange" in the name of an LLC without the approval of the Attorney General.  And they are right; it says here in Section 204(h) NY limited liability company law:

"The name of each limited liability company as set forth in its articles of organization [......] shall not, unless the approval of the attorney general is attached to the articles organization [.......] contain the word "exchange" or any abbreviation or derivative thereof.  Such approval shall not be granted by the Attorney General if in his or her opinion the use of the word "exchange" in the limited liability company's proposed name would falsely imply that the limited liability company conducts its business at a place where trade is carried on in securities or commodities by brokers, dealers or merchants."

Is that the end of your name?  No, you can go ahead, write a letter to the Attorney General and describe the business you are planning to conduct under the name "Life Exchange, LLC".  I am assuming it's some kind of life coaching, re-birthing center type of activity.  If you explain it right, there should be no doubt that you are not trying to establish a New York stock exchange in your backyard and they will happily give you the approval.

Many people have successfully done it already, as you can find out by searching the New York State corporate database with the term "exchange."  There are plenty of businesses using the term "exchange" that have nothing to do with trading stocks or commodities.

**This post is for informational purposes only and does not constitute legal advice**

How to Amend a Contract

When you enter into a contract (or agreement, same thing really) you cannot possibly foresee all future developments of the relationship that is governed by that contract.  As a result, you may find yourself in a situation where you have to amend an existing contract.

How do you amend a contract?  By entering into a new contract, which provides for the terms of the amendment.  Let's say you entered into a contract on August 10, 2006, which contract provided in its Section 10:  "This contract terminates on August 1, 2010."  Now you and your contract partner decide that the contract should really go on until August 1, 2012.   You plan on amending the original contract.

The amendment of the provision should be in writing and clearly reference the agreement that is being amended.  The amendment doesn't have to be very formal, it could be in a simple note or letter, but it should be in writing and signed by all the parties who signed the original agreement.

By way of example, the amendment could look like this:

Amendment

Joe Junior and Daphne Danzig entered into the Service Agreement dated August 10, 2006 and wish to amend the Service Agreement.

Joe Junior and Daphne Danzig hereby amend Section 10 of the Service Agreement by replacing such section in its entirety with the following:

"This Agreement terminates on August 1, 2012."

Other than as amended hereby, the Service Agreement shall remain in full force and effect.

So agreed, this ___ day of August, 2007.

Joe Junior (signature)

Daphne Danzig (signature)

There you have it.  You can do this as many times as you want, so that you may end up with Amendment No. 1, Amendment No. 2 and so forth.  However, if there are many changes to an Agreement at the same time, you may be better off by "amending and restating" the Agreement.  I'll explain what that means another time.

**This post is for informational purposes only and does not constitute legal advice**