what licenses re needed what licenses re needed? On 2/21/2012 5:42 AM starting mine is yours. a sell used and new clothing shoes bags       Retail Trade home business with 0 employees in Fort Smith, AR  , 72903, Pine Bluff Sebastian County I do not want to pay excessive taxes because I am self employed and I am subject to self employment taxes. Is there a way to avoid paying it.           My business consists in dealing with real person to person encounters. To begin, you need a sales tax id number because you sell taxable items.  Taxable merchandise is anything you lease or sell and it is touchable. Second, a business tax registration is required. That registration is different than sales tax, income tax, or employement tax.  It is also called a home occupation permit or business permit license.  Finally, you need to register a ficitious business name, but, better, instead, you could register an S  or C corporation or set up an LLC. If you create an S corporation you will not pay excessive self employment taxes because instead of salary you can pay yourself in dividents. Keep in mind that you still need to pay yourself a reasonable salary as defined by the IRS.         Protect your personal assets and avoid suits that might ensue from business consists in dealing with real person to person encounters. Click Here to Submit It. Frequently Asked Questions: Q: I started a business as a partnership but never really took off. Do I still need to file an IRS return? A: If you filed for a a partnership but never started a business, you need to file a tax return anyway and just fill out the gross business income as zero. Otherwise the IRS will charge you with a penalty for non filing the return. Q: What if the independent contractor is an LLC or corporation, do I still need to send them a 1099 form? A: To be safe, yes, send everyone that does any work for you for more than $600 a 1099 form. Q: What is the threshhold before I am required to file a business tax return? Even if you made $0 dollars, you still need to file a business tax return. Q: What is an EIN? A: An EIN is an IRS employer as well as business tax ID number. AR Tax ID Number. AR Tax ID.