Company Organization, Licenses and Permits

Before you apply for permits and licenses it will be very helpful to decide the form of your company organization. Here are the most common formats:

• Sole-proprietor. The business is owner by an individual, as opposed to a partnership or corporation.

• Corporation. The business is an organization formed with state governmental approval to act as an artificial person to conduct business. One or more individuals or other organizations may have ownership of a corporation. There are several different forms of corporations. The most popular with pet groomers are “S” corporations but some are “C” corporations. It is very important that you discuss the form appropriate for you with a qualified business attorney or Certified Public Accountant.

• Limited-Liability Company. Often termed LLC’s these are companies who owners and managers enjoy limited liability and some tax benefits, but avoid some restrictions associated with “S” corporations. Once again there are different types of LLC’s and you should secure professional assistance before forming one.

It is common for individual groomers operating as one-person businesses to either be a sole-proprietorship or “S” corporation. You can always start as a sole-proprietor and later take another company form.
 

If the grooming business is a corporation or limited liability company the primary target is the company organization. As a result there is an extra layer of protection for the personal assets owned by the company owner(s) when litigation is filed against a company organization.

It's not perfect protection. Where negligence is marked it is possible for a court to break the “corporate veil” and expose the personal assets of the company owner(s) to judgments. As you can imagine there is plenty to learn about company organizations before you become self-employed.

We have another recommendation that is vitally important. Before you form a company with an attorney, review your plan with a Certified Public Accountant with a great local reputation for small business.

Your business attorney clearly understands contracts and relationships, but rarely the taxable consequences of the plans timing and organizational format. Therefore, form an action plan with the attorney and then run to the CPA and say, "What are the taxable consequences of this plan?"

You would be amazed the responses our clients have shared. One time the groomer said their accountant advised them to wait 30 days and form the company in January instead of December. Thereby the groomer saved $2000 which would have been required had the company formed and operated in December. That's a very simple example but there have been many more.

Sometimes when we form companies we go back and forth between the accountant and the attorney like a restless dog pacing to get out of a cage. However, it's always worked out to our benefit. We've also had great experiences using the services of a professional who is both an attorney and a CPA. Now that's convenient.

Once you know the form of your company you must register it with required departments of your local, state and federal government. Registration is usually accomplished by securing required business licenses and permits and other filing requirements.

License & Permits

Career seekers often confuse vocational licenses with business licenses and permits. Use the term "vocational licensing" when you talk about groomers required to pass mandatory education and testing and meet additional standards applied to their profession. That’s still in the future as no U.S. has yet to legislate vocational licensing for groomers. Unlike groomers, hairstylists for people are vocationally licensed. If they own a business, the business must also have a business license to operate. The latter simply means a permit to operate as a business in a specific jurisdiction issuing the license.

A business license doesn’t endorse them as being vocationally licensed. The latter indicates that the hairstylist has taken and passed required education and tests and met specified standards of service performance. We don’t mean to be redundant but the confusion among groomers is very prevalent.

• Local government
• State government
• Federal government

It’s very important for you to remember that the laws of your local government are different from those of groomers doing business in a neighboring town or an adjacent county. Business regulations vary by state, county, cities and towns. Asking other groomers outside your area what you need to do to secure licenses and permits could very well work against you if you rely on their information. Certainly you may share similarities and differences, but don't refer to them for your requirements when they are outside your local jurisdiction. Also, requirements may be different depending upon the form of your company organization. Unfortunately we have seen groomers on the GroomerTALK Message Board ask other groomers far and away from them what to do to register a business. It’s fine to share and compare, but not use others as a reference when it comes to your legal registrations and business organization!

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