The business license is the legal permission that you can start operating your business in any country. It is the best way to ensure your customers that the business is trustworthy and reliable.
Getting a business license is the final step that makes you feel you have already completed all the steps. Once you have filed your business name, chosen a business structure and registered in a taxation system, you can apply for a business license.
There are different requirements and regulations for business licenses in every country. Depending on the country, location and also business type, business requirements vary greatly. Every country has its own amount of fines, penalties, and so on.
Before starting talking about business licenses and permits, let’s clearly understand how licenses differ from permits.
Licenses are approved by a government agency as a legal permission for doing or using something, such as driver’s license, fishing license, and so on. For getting a license, you will either need to pass an exam, or simply a registration.
Permits are a particular type of licenses that controls public safety. Permits are granted by a government agency following an inspection. For example, a fire department may grant you a permit to open up a commercial space to customers, or a health department will grant you a permit to serve food.
Becoming licensed in business is highly recommended, as it is the proof of your legal business activity. Across different states, cities and industries, there are different types of business licenses.
It depends on your business to understand which type of business license or permit you need. For that, you should contact the counsel to find out which one is most suitable for your business.
Now we are going to delve into several basic types of business licenses and we hope that it will help you.
Business operating licenses are provided from the state or city you live in. They give you the legal permission of setting up your business in your city or state. You may need to apply for these two licenses one by one. As there are different requirements and regulations for both city and state licenses.
You may need to get a DBA license or permit, if you have started operating your business under a different name from the initial one. In this case, you should also get a DBA name. The latter is also known as a trade name, assumed or fictitious name. Depending on the location, DBA requirements vary greatly.
There are different business regulations in different municipalities. Before setting up your business, you should verify whether your city is zoned for your particular type of business, or not. If your city is not zoned, you will need to apply for a zoning variance. You must also prove the municipality that your business will not cause any disruption in the community.
You may need to get a building permit in order to verify that the building you operate in is not objectionable. It is one of the most important components of applying for business insurance. Likewise, you will be allowed to manage your business from your home by having a home occupation permit. In this way, you make your neighborhood zoned for your home business activity. So, everyone can be sure that your business from home does not cause any traffic or noise in the community.
You should get a fire inspection and safety permit from your local fire department. IT verifies that your business does not break the safety rules. By getting that, you will guarantee that your business will be operating safely. This permit is important especially while operating with flammable or burnable materials. It depends on the jurisdiction whether you will need to get a fire department permit, or you can just carry out regular inspections. You’d better check with your local government and find out which level of fire inspection regulations you need to apply to your business.
It is an important part to meet all the required tax regulations while conducting a business. However, it depends on the type of your business to find out what taxes you need. Even small business owners have to obtain several licenses for tax purposes. Almost all business owners need to get an Employer Identification Number (EIN). By obtaining it, the owners will have the legal permission of hiring or firing employees. Some businesses must get a seller’s permit or a sales tax permit in order to be able to sell goods or services.
Mainly all business owners have to get health licenses and permits before operating their businesses. Especially, this rule is very strict for businesses in the food and beverage industry, as they directly deal with the customers’ health.
Some businesses must obtain the government regulated environmental licenses. This type of licenses uphold environmental factors; such as air or water quality. For example, businesses that produce water waste must mention about an urban runoff their business may cause. Such companies are car washes, outdoor cleaning companies, and so on. These companies must check if they are suitable for these licenses and then apply for them.
If you want to avoid from getting business fines, you must obtain a business sign permit. Depending on how big is the sign or where it is situated, there are various requirements for it. You can check with your local government and get your sign permit beforehand.
Apart from all other licenses and permits, you must surely get the specific licenses and permits your business may need. It depends on in which sphere of industry your business operates on. There are several industries that require specific licenses and permits. These are cleaning and janitorial services, beauty salons and spas, healthcare and child care, food and alcohol, pharmaceuticals, insurance, construction, architecture, plumbing, engineering, pest control, landscaping, tobacco, general contracting, and temporary events.
One of the most usable permits is reseller’s permit, which will need the companies that resell products or even services. And, the other one is Alcoholic Beverage Control (ABC) license, which is mostly required for food and alcohol provided companies.
Before getting a business license you should form an LLC. Though there are many companies that only establish an LLC, in this way they just put into risk their business assets.
Getting an LLC first is the at most reasonable decision, as a business license demands the legal name of your business. Sometimes, you will need to request for changing the name of your business. This happens when you get an LLC after your business license. Whenever you change the name of your business, you may be required to pay some additional fee.
Sometimes, it is not easy to apply for a business license, as not every state has its own central agency that supervises licensing. The information for filing a business license can be found on state, country and federal websites.
You can also contact State License Bureau in order to find more information about your business license. Moreover, if you want to be more confident and more professional in your business, you can hire a company or an attorney to organize the process.
Depending on your license type, state, location and several other factors, the cost of your business license can vary. On average, the fee for the business license is about $50-$500.
However, every state has its own business requirements and certain fee amount for business license. Besides, if your license has an expiration date, in order to renew it you will need to pay all associated costs. In order not to be shocked, you’d better contact your local agency and find out how much your business license costs in advance.
For example, as for Decatur’s Revenue Department, most business licenses start between $75 and $100. The fee for a business license in Sparks, Nevada is $105 plus a $4 tech fee. There can be additional fees depending on the type of business. The annual fee for the business license in Chino Hills, California costs $20.
Always remember that the process of getting a business license depends on the type of business license you need and where you want to start operating your business.
There are three ways to get your business license. The first one is that you can apply for it on your own delving into all the details in advance. The second option is that you can contact a third-party filing service that will help you to get prepared for the license and will oversee the process. And, of course, you can hire an attorney who will bring over his professional and profound knowledge about the type of business license you need.
Anyways, if you have decided to apply for a business license on your own, you can follow these basic steps and get prepared for it better:
At first, you’d better research and find out what licenses your business will need at the local, federal and state level. If you can not find any information, try to get contacted the relevant agencies in the location of your upcoming business.
This process can be long-lasting, but it is important not to lose patience and wait until getting a response.
Before looking for other business licenses, remember that you should get an Employer Identification Number (EIN) from the Internal Revenue Service (IRS).
Depending on the type of the business license you need, there will be different requirements in the application. You need to be attentive and identify what documents you will need to attach.
However, there are some documents that are mainly asked for most licenses. They are the following:
If your business is in architecture, construction or in another similar industry, you will need to submit these documents too:
After making sure that everything is accurate, you can already submit your application.
Generally, it takes anywhere from several days to months to get a business license. Some states provide licenses faster, while for others it can take a few months. The type of your business is quite important here, as the jurisdiction determines how long it will take to get it.
Based on your business industry, the waiting time can vary, too. As for some industries, there are extended business licensing requirements and approval time frames defined by the government. Such industries are farming, vending, dry cleaning, restaurant industries, and so on.
If the national government has overseen the industry, federal agencies should approve the business licenses. Such industries are agriculture, firearms, aviation, fishing, mining, transportation, and tobacco.
If you are approved and you have received your business license, you already have the legal permission for conducting your business. Yet, you should keep in mind that getting your business license is not the last step of the process.
You may need annual renewal for your business license, so it is better to note all renewal requirements immediately, in order not to let your business license expire by accident. Try not to miss anything, as in that case your business might be fined, or sometimes even it might be shut down. Organize all the documents beforehand and avoid from extra fines, penalties and other expenses.