Company Business License
Have you just started your business? In the excitement of running a new business, it is quite a possibility that you ignore the need for business licenses and permits. Licenses and permits are necessary before you legally start operating your business. Having all the licenses and permits in place is mandatory. Also, if your business has employees or sells taxable goods or services, it is necessary to register with the taxing authorities. The requirements for issuing business license vary by industry and depend on where and how you conduct business. Get answers to all your questions relates to business licenses.
What is a Business License?
A business license gives the owner the right to start a business in the county, city, state or country. It indicates that the company has the government’s approval to operate. Depending on the type of your business you run, you may need a county, local, state or federal license – or none at all. Your company’s location will determine the type of license you need and where to obtain it. Government agencies can shut down or fine a business that operates without a license. Hence, it is necessary to find out if you need one as your start-up process. Note that: Not all businesses require a license.
Who Issues Business Licenses?
Business licenses, permits, and tax registrations are administered and issued by all levels of government (federal, state, and local) which also includes county and municipal governments. In many cases you may require licenses on each governmental level. Furthermore, there are various agencies and departments that are involved in the licensing process. There are over 40,000 separate licensing jurisdictions in the United States, and each has its own specific licensing requirements.
Why are Business Licenses Required?
Licenses are required for three main purposes:
- To identify your business and make sure you are accountable for your actions
- To protect the public health and safety
- To keep track of your finances for tax purposes
What are the Pitfalls of not Being Licensed?
Not being compliant with all licenses, permits, and tax registrations could leave you unprotected legally, may lead to expensive penalties, and can even jeopardize your business.
With pressure against raising traditional taxes, governments are always on the lookout for alternative revenue streams, which means ever increased vigilance for business license evaders. Many even resort to hiring third party collectors. The pitfalls of not being properly licensed include:
- You cannot open your new location
- Your location may be padlocked
- You may be hit with costly penalties and interest, or even personal liens
What are some Common Licenses, Permits, and Tax Registrations?
For every different type of business, different license or permit is required. Following are some of the most common licenses and permits that every business owners may need to have before starting his/her business.
It is one of the primary license that is required for almost all types of business. For obtaining a business license, you need to contact your city’s business license department. The department will guide you to get a business license and it will essentially grant you the right (after you pay a fee, of course) to operate a business in that city. When you file your license application, the city planning or zoning department will check to make sure your area is zoned for the purpose you want to use it for and that there are enough parking spaces to meet the codes.
You can’t operate in an area that is not zoned for your type of business unless you first get a variance or conditional-use permit. To get a variance, you’ll need to present your case before your city’s planning commission. In many cases, variances are quite easy to get, as long as you can show that your business won’t disrupt the character of the neighborhood where you plan to locate.
If you’re planning to start a business in your home, you should investigate zoning ordinances especially carefully. Residential neighborhoods tend to have strict zoning regulations preventing business use of the home. Even so, it’s possible to get a variance or conditional-use permit; and in many areas, attitudes toward home-based businesses are becoming more supportive, making it easier to obtain a variance.
Fire Department Permit
You may need to get a permit from your fire department if your business uses any flammable materials or if your premises will be open to the public. In some cities, you have to get this permit before you open for business. Other areas don’t require permits but simply schedule periodic inspections of your business to see if you meet fire safety regulations. If you don’t, they’ll issue a citation. Businesses such as restaurants, retirement homes, day-care centers and anywhere else that lots of people congregate are subject to especially close and frequent scrutiny by the fire department.
Air and Water Pollution Control Permit
Many cities now have departments that work to control air and water pollution. If you burn any materials, discharge anything into the sewers or waterways, or use products that produce gas (such as paint sprayers), you may have to get a special permit from this department in your city or county. Environmental protection regulations may also require you to get approval before doing any construction or beginning operation. Check with your state environmental protection agency regarding federal or state regulations that may apply to your business.
Some cities and suburbs have sign ordinances that restrict the size, location and sometimes the lighting and type of sign you can use outside your business. To avoid costly mistakes, check regulations and secure the written approval of your landlord (if you rent a house or apartment) before you go to the expense of having a sign designed and installed.
County governments often require essentially the same types of permits and licenses as cities. If your business is outside any city or town’s jurisdiction, these permits apply to you. The good news: County regulations are usually not as strict as those of adjoining cities.
In many states, people in certain occupations must have licenses or occupational permits. Often, they have to pass state examinations before they can get these permits and conduct business. States usually require licensing for auto mechanics, plumbers, electricians, building contractors, collection agents, insurance agents, real estate brokers, repossessors, and anyone who provides personal services (i.e., barbers, cosmetologists, doctors and nurses). Contact your state government offices to get a complete list of occupations that require licensing.
In most cases, you won’t have to worry about this. However, a few types of businesses do require federal licensing, including meat processors, radio and TV stations, and investment advisory services. The Federal Trade Commission can tell you if your business requires a federal license.
Sales Tax License
There are two reasons you need a certificate of resale (in other states, this may be called a “seller’s permit” or a “certificate of authority”). First, any business selling taxable goods and services must pay sales taxes on what it sells. The definition of a taxable service varies from state to state. Depending on individual state rulings, both the parts and labor portions of your bill may be taxable.
Sales taxes vary by state and are imposed at the retail level. It’s important to know the rules in the states and localities where you operate your business because if you’re a retailer, you must collect state sales tax on each sale you make.
Before you open your doors, be sure to register to collect sales tax by applying for each separate place of business you have in the state. A license or permit is important because in some states it’s a criminal offense to undertake sales without one.
Health Department Permits
If you plan to sell food, either directly to customers as in a restaurant or as a wholesaler to other retailers, you’ll need a county health department permit. This costs about $25 and varies depending on the size of the business and the amount and type of equipment you have. The health department will want to inspect your facilities before issuing the permit.
Hence, your business needs to be licensed to legally operate. Regulations vary, so it’s necessary to understand about your business’s licensing rules where your business is located, failure to comply can have serious consequences. Fortunately, getting a business license is neither very expensive, nor very time consuming. In case of any help, you can always contact a professional attorney.