Although it may not be the most exciting part of starting a business, one can’t-miss step in getting set up is securing the licenses and permits you need to legally operate your new business. No matter how small your business operations are, understanding licensing requirements and permits is essential. Don’t skip this part and risk getting your business in trouble right out of the gate!
Although business licenses and permits can be cumbersome to apply for, they benefit you and your clients. Getting a license for your specific business should be one of the first steps in your business plan because it protects your clients and establishes your trustworthiness.
Below, we’ll walk you through the types of business licenses you may need for your business in hopes of making the process a bit easier for you.
What is a business license?
The term “business license” is all-encompassing, which makes it difficult to define. As a small business owner, you will need a combination of licenses and permits from federal and state governments to operate your business legally. The requirements and fees you’ll encounter will also depend on your business activities, location, and rules placed by government agencies.
A business license can be defined as a document issued by a government agency to permit you to operate a business within a specific location and industry. Going by that definition, there’s not one checklist to cover the licenses and permits that every business needs. So, make sure to do your due diligence in researching the requirements for your industry. You can start by calling your county’s or city’s business licensing department to ask about permits and business license requirements you may need to operate in your area.
If you are starting a new business, you may need:
- A fictitious name or “doing business as” (DBA) name
- A local business operating license
- A health permit, if your business sells or handles food products
- A building permit, if your business is in a new location or you’re renovating an existing location
- A fire inspection and permit
- State licenses and permits, e.g., professional licenses
- A sales tax permit
Be sure to research and contact your state business licensing department, to ensure that you obtain everything you might need.
1. Research the different licenses you need
Research the regulations in your city, county, and state to learn the type or types of business licenses you’ll need. If you’re not sure what government regulations apply to your business, the office of the Secretary of State might be a good starting point to ask for assistance.
You may also want to visit the websites of the Internal Revenue Service (IRS) and the U.S. Small Business Administration (SBA) for additional information and resources and any local business development websites specific to your county or town. By using these resources, they can help you determine which licenses and requirements you will need by industry, location, business type, and more.
2. Organize the necessary information
Each business license application may require different documents, so make sure you go through each form. You can get assistance and ask for more details by calling the licensing office in your county, city, or state or checking their websites. In many states, you may be able to apply directly from the website as well.
3. Apply for the business license
To save time and ensure you submit your application with all necessary documents and requirements, you may contact the business licensing office. If you’re technologically savvy, you may do your own research on their websites. Verify the business license cost and make sure you send the right amount for each application. The costs of business licenses can vary by location and agency, but the average cost of a business license is about a few hundred dollars.
Take note that even if you are registered with the state as a partnership or limited liability company (LLC), you may still need local business licenses. And depending on your location or if you’re submitting your application by mail, you may need to wait to find out if your application is approved. You shouldn’t begin any business activity until you receive your business permit, which can be approved instantly or take months, depending on the location and type of agency.
4. Make a note of the renewal requirements
When you receive your business license, take note of the renewal requirements and date. Have a plan or system to remind you of the renewal to avoid letting your license expire, such as a digital calendar reminder on your phone or computer. At best, that happening may require you to start a new application, or at worse, you may be subject to fines or revocation. For instance, if you’re late renewing your liquor license, you could lose the license and be unable to operate that part of your business.
Types of Business Licenses
As established, the permits and licenses you’ll need will vary depending on your business location and industry. So, it’s not possible to cover all the licenses you may need in one list. However, here are common licenses and necessary permits:
- General business license: Most businesses will need an operating or general business license before operating in a city or county. You may need to apply for these separately at the state and city levels because the requirements and rules vary for each governing body. You may also be obligated to apply for an employer identification number (EIN).
- Fictitious name/DBA name: If you’re a sole proprietor and intend to represent your business with any name other than your legal name, you will need to apply for a DBA name. For example, if your name is Dylan Murphy, and you want to use “Dylan’s Photography” as a business name and to market your services, you’ll need to apply for a fictitious name or an assumed name to do that.
- Sales tax license: Generally, only businesses that sell physical items need a sales tax license or a seller’s permit. This allows a business to collect sales tax for the city and state in which they operate, if applicable. But some states require it for certain service-oriented businesses as well. So, you’ll have to verify that with the licensing office in your county or the office of the Secretary of State.
- Zoning permit: There are zoning regulations that control which business types can and can’t operate in a zone. These rules don’t just apply to big businesses, such as factories and restaurants; they also affect home business owners. If your area is not zoned for your type of business, you may need to apply for a variance or a conditional-use permit and prove that your business will not disrupt the community.
- Home occupation permit: If you are operating your business from home, verify with your city or county if you need a home occupation permit. You may also need a building permit to prove that your home is up to code. This permit may apply to you if you plan to make and sell specialty wedding cakes from your kitchen for instance.
- Health permit: If your business involves selling and handling food and beverages, your workspace may need to go through an inspection to ensure it’s up to health code standards. You will also have to comply with the Occupational Safety and Health Administration (OSHA).
- Professional/occupational license: These are licenses specific to professional businesses and industries. Examples of occupations and industries that may require special licenses and permits include architecture, beauty salons and spas, child care, cleaning and janitorial services, construction, electrical, engineering, food and alcohol, general contracting, health care, insurance, landscaping, pest control, plumbing, temporary events, and tobacco.
- Fire department permit: If your business operations involve the use of flammable materials, are open to the public, or have several people congregating in one location, such as a day care center, you may need a permit and/or an inspection by your local fire department.
- Environmental licenses: Some states and local governments require certain businesses to get special pollution control permits to protect air and water quality in the community where the business operates.
- Sign permit: Before you put up a business sign, you’ll need to check with your municipality or local regulatory body to acquire the necessary permits. You also need to verify the size of the sign you’re allowed to put up and where you can put it. Some hefty fines are issued for signs without proper permits, so you need to do your due diligence here.
Get Help With More of Your Business Filing Needs
Whether you’re a freelance chef, plumber, marketing consultant wanting to start a side hustle, or a full-time independent contractor, you’ll need to apply for a business license or two. The application process may need you to do quite a bit of research, but hopefully, this article provided you with information that points you in the right direction and makes the process feel less intimidating. Do your due diligence and get the licenses and permits you need to start your business in compliance with the law, and you’ll be avoiding a common, costly mistake too many first-time business owners make when starting out.
If you think you need more assistance with the licensing process, ZenBusiness is here for you. We’ll take the bulk of the stress and work of administrative duties so that you can focus on running and growing your business.