Deborah Sweeney of MyCorporation.com provides answers to the four most frequently asked questions about licensing requirements.
When you’re first starting up a business, lots of things can initially seem unclear or confusing. You’ve got to decide whether to incorporate or form an LLC. You need to figure out if you should register for a DBA.
Add one more daunting task: You must research which sorts of licenses and permits your business needs. Luckily, entrepreneurs have plenty of online resources, such as this searchable Small Business Administration tool for licensing requirements. Below, I’ll answer the four biggest questions surrounding the issue of business licenses.
First of all, what is a business license?
A business license is any government issued permit or registration that a business owner is required to obtain at the federal, state or local level in order to legally conduct business. You can’t officially open up shop without a license so it’s important to get this all squared away before your business starts to invite customers to your storefront.
Does my business really need a business license?
[pullquote]Almost every single local government requires that businesses inside the city or county apply for at least a basic business license and pay the associated fee.[/pullquote]
Almost every single local government requires that businesses inside the city or county apply for at least a basic business license and pay the associated fee. So, in short, yes, your business does need a business license. This license also acts as a minimum tax levied against the business in a concentrated area. Due to this factor, some areas call the license a “tax registration certificate” instead of a business license – good to note in case the name causes some confusion.
Now, how do I get one for my business?
Any city website is a good place to start – there should be a page or section on all the necessary business licenses your new company needs. If you’re in the neighborhood, stop by your local city building to pick up the forms for licenses and permits in person. If you live in a smaller town, you may have to go on up to the county level to see if you can find the necessary information on the county website, especially if your town doesn’t have a licensing bureau.
If after all that you still can’t find anything, check with the state government. Most states have licensing guidance applications, and if they don’t have that in place, they will have a guideline with licensing requirements for you to easily follow.
Do you ever have to renew your licenses and permits?
Yes. Once you apply for and receive your license or permit, you will eventually need to renew it. Rules for renewal will vary, but your city, county and state are going to need you to pay an annual fee along with renewing your licenses. Since it’s just a renewal, the fee isn’t too large, but don’t forget to renew because if you fail to do so and continue to conduct business, you could have to fork over hundreds if not thousands of dollars in late fees. Always stay on top of your payments in order to keep your business in compliance.