How to Become a Tobacco Distributor

Monday, July 22, 2013

How to Become a Tobacco Distributor

The federal government includes cigarettes, cigars, pipe tobacco, roll-your-own and smokeless tobacco in its definition of tobacco products. All U.S. manufacturers of tobacco products must obtain a manufacturing permit through the U.S. Alcohol and Tobacco Tax and Trade Bureau. However, distributors of tobacco products are monitored through state government offices and are required to obtain a business license, a sales tax permit and follow state laws about what brands they sell.

Step 1

Call your state tobacco business licensing department and ask about the distributor licensing process. State governments control the licensing of tobacco distributors. The state where your primary business is conducted or where your home office is located is the state you should contact.

Step 2

Review the state's tobacco distributor requirements to make sure you and your products comply with state mandates. Mandates may include selling state-approved tobacco brands with the correct tax stamp affixed to the tobacco packaging. Tobacco stamps are available from your state government if you are a licensed tobacco distributor.

Step 3

Apply for a tobacco distributor's license through your state government. The licensing process will include providing information about your business, such as disclosing your federal identification number, your business street address and personal information about other business owners. You will also obtain a sales tax account so you can forward collected taxes to the state. State governments do not usually require a fee for obtaining a business license or a sales tax permit.

Step 4

Contact your local government offices and inquire about a business location license. Cities and counties may require you to pay for a business license to operate a business location within their boundaries. Fees are usually small, ranging from $25 to $50 annually.

Step 5

Contact the tobacco manufacturers your state allows you to distribute. Ask about purchasing in quantity as a distributor or applying to become a distributor. The manufacturer will ask for your state license number to verify that you are licensed to distribute tobacco.

Step 6

Contact the tobacco licensing department or board in every state you wish to distribute in. A license in one state may not allow you to distribute in neighboring states.

Tip

Cold-calling retailers or mailing discount offers to retailers are good ways to begin developing your business connections. Becoming a member and advertising with local, state, regional or national tobacco retailers associations is another way to network and build your business.

References (4)

Resources (3)

About the Author

Alex Burke holds a degree in environmental design and a Master of Arts in information management. She's worked as a licensed interior designer, artist, database administrator and nightclub manager. A perpetual student, Burke writes Web content on a variety of topics, including art, interior design, database design, culture, health and business.

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1 comment:

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Easy Tips and Ideas to Start Business

Although anyone can start a business, many people fail because of a bad product or improper research. If you want to start your own business, you can improve your chances for success before you even begin. In order to make your business successful, start strong and make sure that your idea will hold out for the long haul.

Have a Good Product

Ensure that you plan to sell something useful. Although you may think that your product is important or special, that doesn't mean the general public will agree. Ask friends, family and strangers what they think of your product. If they don't seem that interested, ask them why. With their suggestions, you can either improve the product or scrap the idea completely. According to Brad Sugars of Entrepreneur magazine, most small businesses fail because they sold a product that didn't have an adequate market. This also applies to small businesses that provide a service. A lawn-care business might be useful for part of the year in a northern state, but it is in-demand year-round in the south. Consider whether people will actually want to use your service and get constructive advice from those not afraid to give their opinion.

Research Local Businesses

Research local companies before starting up your own business. This will not only give you an idea of the amount of competition you will have, but it will also help you price your product or service. If you're looking to start a wedding photography business, you may find during your research that the market is over-saturated in your area. If not over-saturated, you should contact each business and ask them for a price list. Alter your prices so you can stay competitive with the competition in town. Researching similar local businesses will also help you decide where to locate your business location. Try not to start up a store or office close to another business of your type. If your small business is located away from similar business types, this will cause locals to choose you over businesses that are farther away from where they live.

Get Professional Advice

You may know someone who has started their own successful business. Ask him for advice and listen to his stories of how he started his company. You may gain useful advice on the good and bad ways to start a business. Local entrepreneurs can also introduce you to local product providers or advertisers that you may not have met without their help. Accept any advice with open arms, especially if the advice is coming from someone successful in the area.

How to Calculate Business Start Up Costs

Starting a business in no easy endeavor. It takes a great deal of research, perseverance and hard work. While sweat equity will make your small business more successful, you will most likely need real capital to get the business started. Before you start raising capital and/or investing your own funds, the first thing you need to do is determine the total start-up costs.

Step 1

Determine your costs of sales. For most small businesses this means inventory, the cost of raw materials, manufacturing equipment, shipping, packaging, and warehousing. However, not all businesses sell products. In this case, the cost of sales is primarily the direct labor involved in making the sale. For example, to open a small shoe business entails purchasing enough inventory ($10,000) to stock the store.

Step 2

Determine professional fees. Planning your business structure, i.e., limited liability corporation or general partnership, means hiring an attorney. There may also be the need to pay an attorney for help with establishing trademarks, copyrights, and patents. In this scenario, that puts total professional fees at an estimated $20,000.

Step 3

Determine technology costs. Technology can greatly reduce the cost of labor for small business if used effectively. Most small businesses require computers, printers, cell phones, website development, Internet access, software applications, information security, data storage, and outsourced information technology (IT) consulting. If the cost of technology is $10,000 to start, add an additional $5,000 a year for maintenance (hint: maintenance is not included in start-up costs).

Step 4

Determine administrative costs. This varies with business types and may include items such as business insurance, office supplies, product packaging, parking, rent, express shipping, desks, chairs, fax machines, phones, or anything else necessary to operate the business daily. A good estimate for start-up administrative costs would be $5,000 for the first six months.

Step 5

Determine initial sales and marketing costs. Now that you have your product, you need to let folks know about it. Sales and marketing costs generally include marketing materials for presentations, printing stationery, business cards, advertising, trade show events, and public relations. These initial sales and marketing costs can add up to $3,000.

Step 6

Determine the wages and benefits needed to secure a staff. This includes employee salaries, benefits, workers compensation, and payroll taxes. Let's put the cost of wages and benefits estimated at $20,000 for the first three months of business.

Step 7

Add all costs associated with starting the business for a total. Be sure to only include business start-up costs that will be incurred in the first three to six months of operations. For this example, the calculation is: $10,000 + $20,000 + $10,000 + $5,000 + $3,000 + $20,000 = $68,000.

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Monday, July 22, 2013