The essential guide to the type of licenses or permits your business needs.
Turning a small business into a successful startup is a long journey. The road to success can vary depending on the type of business you run, your country of operation and the regulations your business has to abide by.
Every business is unique and has to acquire its respective types of business licenses and permits.
But, not all businesses need licenses.
For instance, if you are starting a brewery you’ll need an alcohol permit, a zonal permit, and a few other licenses to legitimize your business.
On the other hand, if you’re selling hand-crafted earrings in your residential space, you might not need a license or permit.
Now, to find the best licenses for your business you should first understand what is a Business License.
A business license is a document that authorizes you to conduct business in a particular industry and area. It is a certificate of trust issued by the government.
The purpose of a business license is to register your business with the government. This helps the government monitor your business activities and renew the trust invested in your business.
A permit is a certificate of in-person inspections that further demonstrates the trustworthiness of your business.
Compliance with government licensing regulations is usually the first step in running a successful business. Most small businesses need a combination of licenses and permits from both federal and state agencies.
Lots of enterprises need at least one business license or permit from their local, county, or state government to conduct any kind of business.
The sort of business license you'll need depends on where you're doing business, what items or services you're selling, and how your company is structured i.e. the number of people employed.
If you operate in many cities, you'll most certainly need to apply for various licenses.
While it’s not always compulsory to have a license, it’s best to have your business registered and regulated. Not only is it convenient later on when you decide to scale your business, but it will also add to your company's credibility.
Depending on the type of business and permit, you can also avail of specific government schemes that offer to boost your business.
Permits or licenses are required for the sale of specified goods or services.
Most countries need businesses to qualify for supplementary licenses and permits before operating certain federally regulated businesses mentioned in the list below.
If your business deals in any one of these sectors of business, it is absolutely necessary for your business to be registered and licensed by the federal government.
Businesses that are regulated by the federal government, such as aviation, mining, etc, require a federal license.
These licenses can be issued by the authorized department of the respective industry.
For example, any pharmaceutical or drug-related business will receive its licenses from the Food and Drug Administration (FDA).
Agricultural businesses like animal products, transporting animals, biotech in the field of agriculture and others would require a permit from the US Department of Agriculture (USDA), and so on.
A state business license is a government-issued document that proves your new company is legally permitted to function in that state.
This could be a seller's license that authorizes you to sell specific products in that state, or it could be an operational license.
Depending on the business, some states strictly require a state-level license. In some other situations, entrepreneurs can get company licences at the local level instead.
Usually, permits that are based on state-wide regulations require an additional license for more localized permissions. For example, a zonal permit is local and sometimes holds more importance.
Procuring the corresponding or necessary licenses and permits are the first steps in making your business more concrete.
These include county and city licenses.
A permit, which can be understood as a license in charge of regulating public safety, is usually issued locally by government bodies like the fire department, or the health department. Before granting an operation license, they often have someone inspect the business to ensure the space is safe for the public.
Ideally, your licenses should be highly visible to the common people. This will establish your business as legitimate and build trust in your customers.
When a company starts conducting business in a new jurisdiction, it must qualify for a business operating license.
The licenses are issued by the nation or city in which you are seeking permission to conduct business.
You might need to apply for them separately on a city and state level due to the requirements and jurisdiction.
A DBA license, or Doing Business As License, is given when your business is named after you.
If you operate a sole proprietorship or partnership, this is common.
A DBA license allows you to legally operate your business under a different brand name than the one you've registered.
Other forms of company organizations, such as LLCs or S companies, can also use a DBA license to rebrand without altering their formal business name.
Every state with a sales tax requires businesses to get a seller's permit, making this a state-level license or permit.
This license allows you to offer your products and services in person or online, as well as collect sales tax on any taxable items.
In certain regions, seller's permits are referred to as sales tax permits or licenses, and they may be required at the municipal or county level.
A planning and zoning permit allows your company to operate in a certain geographic jurisdiction.
Usually, this license is issued locally, while the rules apply statewide or nationwide.
Typically, each place is designated for a specific sort of business.
For example, a site that is designed and utilized for residential purposes is not suitable for the construction of a factory.
If a similar business is already functioning in the area, you will very certainly be granted permission to start your own.
You only need to ensure that your business complies with local government regulations.
With the growing trend of report work or work-from-home, it’s easy to forget that some residential spaces aren’t allowed to be the place a business is run out of.
Depending on the type and scale of your business, there’s a chance you'll require a home occupation permit if you've decided to make your home a place of business.
If your area isn't already designated for home-based employment, you'll need to apply for this permission through your local regulatory body.
The rules vary state by state, but the issuing authority of this license is usually local.
Make sure to check your state regulation when you apply for this type of license.
As per the local jurisdiction, your company may need to get a license to establish a business in certain industries. The rules differ depending on the nation you're in.
To legally identify the functioning sectors, most countries require enterprises to comply with licensing criteria.
The following are some of the major business areas that need an industry-specific business license application — architecture, medical care, construction, electrical businesses, child care, cleaning services, beauty salons, spas, pharmaceuticals and so on.
These licenses are issued on a state level unless it’s a federally regulated business, in which case you won’t need a state license.
By and large, the guidelines are state-to-state.
Some regions share similar guidelines, but it would always be better if you acquired individual state licenses for your businesses.
Profession-specific licenses:
A professional or occupational business license or permit is required for many highly skilled jobs. These are usually the sort of professions that need additional training, trade school qualifications, etc.
It's a means of demonstrating that you're qualified to work in the profession.
Occupations like accountants, dentists, real estate brokers, cosmetologists, private investigators and so on, all require adequate licensing.
The department agencies of each business will check to see if you are qualified to run the business you intend to run.
These licenses are generally issued by the statestate-wise.
If you do not receive the license permission, you will be unable to conduct business, legally.
Most commonly found in service-based businesses, it's extremely beneficial to your firm's reputation if your business has a health permit.
Inspections are necessary for companies, including restaurants, beauty salons, and tattoo parlours, in order to get health licenses.
These permits ensure that you, your visitors, your space, and your crew are safe while conducting business and these permits are usually state-widse.
In certain regions, stringent rules and regulations are in place to reduce the effect of industrialization on the environment. This is in reaction to reduce pollution of air, water and so on.
These permits ensure that businesses are cognizant of their environmental impact. They also back businesses that focus on clean or environment-friendly branding to further solidify their position.
They are also important to businesses that depend on natural resources in their everyday manufacturing process.
Since environmental permits cover a large variety of licenses, the level at which they are issued is dependent on why you’re applying for the permit.
The rules also differ depending on the industry.
For example, construction, waste management or installations are different services that can be provided by the same business.
However, the business will have to apply to three different government agencies on different levels for each individual permit.
Ensure you’re going through all the required paperwork, and applying for the correct permits when it’s required for your business.
Similar to the health permit, a safety permit ensures that everyone is kept safe – from employers and employees to customers and clients.
In fact, in certain areas, the local governments will require safety licenses for a business to operate.
The licenses are mainly compulsory for food supply companies, companies that sell flammable products, and industries that are most at risk of workplace accidents.
Much like an environmental permit, a safety permit can span across all three levels of government — federal, state and local.
Now that you know about the types of business licenses and permits, you need to learn how to register for them.
The registration requirements for your company will typically differ depending on where it is situated.
Your best bet is to contact your city's business licensing department to learn more about acquiring a business license.
Keep in mind that the business license often comes with a small fee.
Once you submit your license application, the city planning or zoning department will verify that your property is designated for the use you intend and that the space you occupy fulfils your’s and the company’s requirements.
The following are the primary papers needed to apply for a business license:
It's essential to sort out what kind of business licenses you'll need once you've decided where you'll be doing business and what business you'll be doing.
You may find out more by looking at the official website of that location.
Alternatively, you can call or visit the local administration to obtain comprehensive instructions.
Multiple business licenses that are granted by different departments or/parties are sometimes required in a single jurisdiction.
Keep track of the criteria needed to verify that your company is operating legally.
After determining which licenses are required, carefully gather all necessary paperwork for the application procedure.
Most company licenses must be renewed every 1–5 years, depending on the restrictions established by the issuing agency.
Renewal fees are sometimes half or less than the initial license amount.
Obtaining a business license or permit is a significant achievement.
It gives your company credibility and builds trust, which you can eventually turn into consumer loyalty.
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