A website offers to "process" Marcus's EIN for $249. What should he know?

An EIN is free from the IRS; apply directly at IRS.gov.

The fee is worth it to get the number faster.

Ray's LLC takes an equipment loan, and Ray signs a personal guarantee. The LLC later can't pay. What's true?

Ray can be personally on the hook because he guaranteed it.

The LLC protects Ray, so he owes nothing.

Only the equipment can be taken.

The lender can collect only from the LLC's bank account.

Marcus sells a driveway job for $1,800 at the homeowner's kitchen table. Under the FTC's Cooling-Off Rule, what must he do?

Tell the buyer about the right to cancel and give a copy of the contract plus two copies of a cancellation form.

Nothing, because the homeowner invited him.

Give the cancellation forms only if the buyer asks for them.

Collect full payment before he leaves.

Dee sells a striping job to a strip-center owner for the business's parking lot. Does the FTC's Cooling-Off Rule generally apply?

No; it covers sales mainly for personal, family or household use.

Yes, every sale over $25 is covered.

Yes, if the owner signed the contract at home.

Only if the owner invited Dee to look at the lot.

Tomas's truck and trailer together are rated at 14,000 pounds. He lives near a state line and takes a job on the other side. What does the federal rule require?

Nothing, as long as he isn't hauling hazardous materials

Which setup puts a driver in Class A CDL territory?

A combination rated 26,001 pounds or more with a trailer rated over 10,000 pounds

A single truck rated 12,000 pounds

Dee and Ray's company elects S corporation status. Ray works in the business. What has to come before he takes distributions?

Reasonable wages paid to Ray through payroll

Nothing; S corporation owners can take any mix of pay they like

Distributions first, then wages if money is left at year-end

An owner's draw, the same as a sole proprietor

Lesson B100.6 · Business 100: Start Right

Set up the business: structure, EIN, licenses, permits and sales tax

5-minute read · Figures checked October 2026

A hand fills out a paper form with a fountain pen — Photo: Cytonn Photography / Pexels, Pexels License

The short answer

Pick a structure, register with your state, get a free EIN from the IRS, and check every license and tax rule that applies to your work: state, county and city. Then check two things new pavement owners often miss: if your truck and trailer need a USDOT number or a CDL, and the three-day cancellation rule for jobs you sell at a customer's home. An EIN is free from the IRS. Never pay a website for one.

Choose a structure

There's no single best structure. Pick one with a CPA, enrolled agent or attorney.

Structure	What it means for you
Sole proprietor	The simplest. You and the business are the same for taxes and debts, so you can be held personally liable for business debts.
LLC	A separate business registered with your state. The SBA says LLCs protect owners from personal liability in most cases, but that protection has limits, and a personal guarantee puts you back on the hook.
Partnership	Two or more owners. Get the written agreement from lesson B100.2 first.
S corporation election	A tax choice filed with the IRS on Form 2553, separate from state registration. Owners who work in the business must pay themselves reasonable wages before taking other money out.

The S corporation form is due within 2 months and 15 days after the start of the tax year it covers. Talk it through with your tax pro before the year starts, not after.

Register, get your EIN, and open the account

Register with your state. LLCs, corporations and partnerships usually register with the Secretary of State. If you work under a name other than your own, most states require you to register that name too. The SBA says registration usually costs less than $300, depending on the state and structure.
Get your EIN from IRS.gov. It's free. The IRS and the SBA both warn about websites that charge for one.
Open a separate business bank account and run every dollar through it. Business Finance 101 covers how.

Licenses, permits and sales tax

Licensing for pavement work depends on where you work. The SBA notes that construction work is often regulated locally, and industry rules vary by state.

State: check your state's contractor licensing board and Secretary of State.
County and city: call the clerk's office about a business license, contractor registration and any permits for work in the right-of-way.
Sales tax: your state decides if your services and the materials you buy are taxed. Ask your state revenue department before your first invoice.
Renewals: licenses expire. Put every renewal date on the calendar.

Your truck, and jobs sold at a customer's home

USDOT number. The federal rule applies when your truck, or truck and trailer together, is rated or weighs 10,001 pounds or more and you haul across a state line. In a metro area that sits on a state line, a job across town can count. Some states, Kansas and Missouri among them, also require one for some commercial vehicles that never leave the state, so check your state's rules.

CDL. States issue commercial driver's licenses. A Class B covers a single vehicle rated or weighing 26,001 pounds or more. A Class A covers a combination rated or weighing 26,001 pounds or more when the trailer is rated or weighs over 10,000 pounds. A heavy pickup with a big trailer can cross that line, so read the rating labels on both.

Cooling-Off Rule. When you sell a job at the buyer's home for $25 or more, the FTC's rule generally gives the buyer until midnight of the third business day to cancel. Saturday counts as a business day; Sundays and federal holidays don't. It applies even if the customer invited you. You must tell the buyer about the right to cancel and give them a copy of the contract plus two copies of a cancellation form, in the same language you used to sell the job. Jobs that aren't mainly for personal or household use, like a business's parking lot, generally aren't covered. Some states give buyers more rights.

Your Move

Do this week

Book a short call with a CPA, enrolled agent or attorney about your structure.
Register with your state, then get your EIN at IRS.gov.
Call your city and county clerks about licenses and permits, and ask your state revenue department about sales tax. Write down who you talked to and what they said.
Read the weight ratings on your truck and trailer, and get a cancellation form ready if you'll sell at homes.

Log it: I finished my setup checklist.

Common questions

Do I need an LLC to start a sealcoating business?

No. You can start as a sole proprietor. An LLC can protect personal assets in most cases, but it doesn't replace insurance, and a personal guarantee makes you liable anyway.

How much does an EIN cost?

Nothing, when you apply directly with the IRS. Sites that charge a fee aren't the IRS.

Do I need a contractor license for sealcoating or striping?

It depends on your state, county and city. Check your state's licensing board, then call your city and county.

Watch out for

Websites that charge to "process" your EIN.
An LLC treated as a substitute for insurance. Lesson B100.7 covers what you need.
An S corporation election pitched as a sure way to cut taxes. It comes with payroll, reasonable wages and more paperwork. Run it by your tax pro.
A truck and trailer that crossed into USDOT or CDL territory when you upgraded the trailer.

Free help

Free practice

Lesson check

5 questions on this lesson, one at a time, with the answer and the reason after each. Pass with 4 right, including every must-know question.

This is general education, not tax, legal, investment or insurance advice. Rules change and every situation is different. Check the sources below, and talk to a qualified professional before you act on it.

Sources

All lessons in Business 100: Start Right →