Tons of things are just plain exciting when you're dreaming about starting your own business: What are you going to call it? What is the store front going to look like? What products are going to fill your shelves?
However, there are also mandatory things to think about like what type of business entity you are going to become and whether you need to apply for a business license. (Don't fall asleep at your computer, we have some quick info for you first). Though these legal aspects might not seem as fun or interesting as setting up the front end of your business, their purpose is just as compelling: moving you one step closer toward your goal of owning a business.
What Is a Business License?
A business license allows you to conduct business in a specific city or municipality. Each city and town in the U.S. is different, and their requirements vary as to who must get a business license and how much the license costs.
There are also different licensing requirements at all levels of government, including city, state and federal. You can go to Business.USA.Gov to research and find requirements on your own, or we can do that for you at Incfile. Our legal experts will determine which business licenses and permits your company will need at every level and we can also do the paperwork for you so you can focus on the other important aspects of getting your business up and running. Saving valuable time and gaining the peace of mind that you've filled out all of the required paperwork right is worth this minor expense.
Who Needs a Business License?
At the state level, anyone who plans to conduct business is required to have a license in order to operate under your particular local government jurisdiction. The federal government often requires a license for more specialized industries or ones with a high level of liability such as those that plan to serve alcohol, sell guns or dispose of hazardous materials.
Many city governments follow this same model. Some cities only require licenses for businesses operating in specific sectors that carry regulations, like food services or solicitation. Check with your state and municipal offices to learn about requirements for your industry.
Why Do I Need a Business License?
There are three important reasons why you need a business license:
Just like when you form an LLC to protect your personal assets, a business license also protects you in case of unfavorable circumstances.
In specialized businesses such as those that offer medical services or sell food products, a licensing program helps ensure public safety.
Maintaining licensing regulations keeps businesses accountable for paying government taxes.
What Is the Difference Between a Business License and a Permit?
Generally speaking, there is very little difference between the term "license" and "permit." Both are administered by all levels of federal, state and local governments. You'll need to check specific regulations at each level to determine what licenses and permits are required for your type of business.
What Are Some Types of Licenses and Permits that Businesses Need?
Here are a few examples of some common licenses and permits that you may need to acquire. Again, exactly what licenses your business needs to operate will depend on your location and industry:
Home Occupation Permit
Hazardous Material Permits
Health Department Permit
Sales Tax License
Building and Civil Engineering Permits
Plumbing, Mechanical and Electrical permits
Where Do I Find the Cost of Business License and Business License Renewal?
Each state has different fees and requirements for permits and licensing. The U.S. Small Business Administration (SBA) has a complete listing of states where you can start your search. The SBA also provides federal industry guides to help inform you about what permits and licenses are needed for your business and how often you'll need to renew them.
I'm Still Confused. Can Someone Help Me With Business Licenses and Permits?
You're not alone if this entire process seems overwhelming. It's complicated to get your business up and running, and deciding what government paperwork to file can create additional stress. Fortunately, Incfile has a Business License Research Package that can get you started on this process for only $99.
We'll do the necessary research and tell you about all the licenses, permits and tax registrations your business needs, and we'll also provide application forms to file with the appropriate licensing authorities. This package is a simple way to delegate the hard stuff so you can focus on the exciting part: getting your business up and running.