When starting a new business, there is a good chance that you will have to register your company or get a business license and other permits needed to operate. The industry and location in which you operate will determine the licenses and permits you need. Since getting a commercial license can take a lot of time and resources, it’s important to know which one applies to your business (and how to get it) before getting started.
A commercial license is the legal registration of your company that allows you to operate within your field of work and jurisdiction. Small businesses are required by law by the federal and local governments to obtain applicable business licenses before providing goods or services. Trade licenses benefit provinces by allowing them to collect revenue, impose zoning restrictions, and regulate companies that operate within them; however, a business license can be beneficial for your small business as well
Everyone has to deal with the finer details of starting a business; regardless of your field of business, starting safely and legally includes at least a little routine. You need to make your business a formal legal entity, and get an in-depth look at the commercial licenses and permits you need at the local, state, and federal levels to be able to operate without fear of being fined – or worse, having to close. You can achieve all these when you get a business license.
ALSO READ: How to open a retail store (Complete Guide)
In addition to obtaining any federal small business licenses, you may also need one or more licenses from the governing agency in your state. Each state has its own process for issuing small business licenses, but figuring out how to get them is easy. You will only need to contact the governing authority in your state to verify whether or not it requires it. If you do, the application process will begin. In most cases, you will be able to apply for your business license online.
What does a business license mean?
Obtaining a business licenses or permits goes beyond just registering or advertising your business entity – such as a limited liability company or corporation; just because you set up your business or established a Limited Liability Company does not mean that you are done with the fees and paperwork.
A work permit can be refused if your application is incomplete, unsigned, or if you have not signed it by the appropriate people. You may also be rejected if you fail to follow the instructions on the form. It is a good idea to contact the licensing agency and make sure you have the correct form (this is not out of date) and ask them about anything that is not clear on the form.
Often times, a citywide business license is granted which is a fee paid to obtain a tax registration certificate that then allows you to legally conduct business in that area. The number and type of licenses and permits you will need depends on several different factors: the type of business you operate in, where it is located, and your specific business needs.
Most people can count on getting a general business license, and if you sell tangible goods, plan to get a sales tax license unless you’re in an exemption state.
ALSO READ: Best and worst times of year to look for a job
There are also industry-specific licenses, such as health licenses for restaurants, professional licenses for doctors and accountants, and more. Otherwise, you will have to check with your local jurisdiction (county or municipal company) to find out what other licenses you may need. It’s smart to plan for the need for at least a few different licenses to start up. Business licenses can cost anywhere from $ 50 to $ 400 each. If the licenses in your industry are particularly limited or competitive, you may want to include them in your business plan.
How to Get a Business License
- Look for the regulations in your area (state, city, and county) to determine the type or types of commercial licenses you will need. If you are not sure which government regulations apply to your business, contact your state’s governing body for assistance.
- Submit your application with any necessary business licensing requirements (such as your entity documents). You may need to pay a processing or deposit fee to place your order.
- Depending on your situation, you may have to wait to see if your application has been approved. Once approved, you will receive your work permit which will allow you to work legally in your area.
- If your license has expired, you will have to renew it according to the regulations in your state, city, or county.
Why do you need business licenses?
- Liability
Commercial licenses help protect the most important things in your business. Suppose your business is harmed or injured an employee. With a license, you are not personally liable. Without one, your personal assets could be in trouble. Commercial licenses help hold companies accountable. Your actions, behavior, and how you run your business can be linked to your business license. To reduce your liability, commercial licensing helps.
- Administration and taxation
Another business license benefit is that it allows you to open a store! This administrative feature allows you to start your business and stay open for business.
Beyond that, your licenses will help you pay taxes. The government will use your license to find out how much money the company has put in your pocket. When it’s tax season, they’ll have your business profits available. It protects the government and your business from any tax mixing.
- Accreditation
Licensing the business also means that you can be certified by a trusted certification body. This typically includes your business meeting certification standards, including a commitment to make a good faith effort to resolve consumer complaints. Certification can help your business grow.
Difference between business licenses and permit
Business Licenses are required by state governments for many professions – including not only doctors and attorneys, but also (in some states) security guards, makeup artists, and auctions. These licenses are only granted after a test that demonstrates that applicants are proficient in their trade and understand the relevant rules and regulations.
Business Permits are a specific type of license that regulates public safety. The permits are usually granted by a government agency after an inspection. The fire department, for example, might give you a permit to open a commercial space for clients, and the health department will give you permission to serve food.
