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Starting a small business demands changing many hats and donning roles you’d never thought even existed! While registering your business initially seems daunting, understanding and gathering documents for the different business licenses and permits can feel further intimidating.
If the thought of navigating through business licenses and permits overwhelms you, thankfully, you need not worry much. As long as you are organized and well-researched, you should get your licenses and permits timely!
Most new small business owners often wonder if they at all need a business permit. For example, if you plan to sell handmade crafts at a local gig, you probably don’t need a license.
However, if you plan to start a dental health clinic or a restaurant, you will need both permits and licenses. In other words, the exact nature of your business qualifies the kind of permits and licenses you may need to acquire.
In this article, we take a detailed look at what business licenses and permits. With this information, you can decide if you should go ahead and make an application for one.
If you’ve heard people use the terms “license” and “permit” interchangeably, don’t feel confused anymore. Business licenses are more generic and allow you to do something in general. For example, a liquor license may allow you to sell liquor at your restaurant or bar.
Licenses also have an underlying subtext of expertise and competence. For example, psychologists, hairdressers, and others carry special licenses.
Permits allow businesses to run specific operations. Usually, a business permit denotes safety; thus, hospitals may require health permits. A hospital may require a health permit, but a psychologist working there will require a practicing license.
Another example is a gun carry permit, which allows the permit holder to carry a gun concealed (or non-concealed if the permit allows).
A business license or a permit allows an existing business to carry out its stated business activities. However, licenses and permits themselves do not bring a business into existence. If you have a business idea, you will first need to make sure that you register a company.
Consulting a tax professional is the first step to deciding which business structure fits your business idea the best. Once your business is registered, you will then need the relevant permits and licenses to carry out your business activities.
If you are a business owner or planning to become one, you will need a combination of business permits and licenses. Both permits and licenses are handed out by federal and state agencies, depending on their jurisdiction.
Whether you need a federal permit, license, or something handed out by state agencies, the answer depends on your business activity and location.
Federal Agencies such as the Alcohol and Tobacco Tax and Trade Bureau and the US Department of Agriculture may hand out licenses and permits if any federal agency regulates your business activities.
For a complete list of agencies that provide licenses and permits for these business activities, visit the US Small Business Administration page dedicated to applying for licenses and permits. To ensure that you do not violate any rules and regulations, you may take a good look at the list below.
State licenses and permits are handed out by non-Federal entities such as state authorities, city or county municipalities, and various other state government agencies.
These licenses and permits are given to business owners who intend to operate in certain business activities. States often control a more significant number of business activities than the federal government.
Some examples include:
While some licenses expire after a certain period, it is quite easy to renew them if you timely realize that the expiration date is approaching. As the US consists of 50 states and several territories, it is essential to research the kind of business permits and licenses you will need. An excellent place to start is your own state’s official website.
Most county and municipality-level permits and licenses come under state jurisdiction. Nevertheless, there are times when your business activities may come under specific laws.
As a result, you will probably need to visit your county and city offices, including the county clerk’s and state tax offices. This information may not always be available online, and you may physically have to visit the offices concerned.
Alongside business licenses and permits, your profession may require an additional license to practice. These licenses are often handed down by specific professional bodies such as state-specific mental health boards, certified public accountant (CPA) licenses, the license to practice as an attorney, etc.
Doing ample research before calling yourself a professional and starting a business is important. The penalties can be rather harsh if you practice a regulated profession without a valid license.
Here are some examples:
There can be several non-professional licenses as well. These may be related to health, building, zoning, and the environment. For example, if you start a business next to a protected park, you may have to get additional clearance that your business activities will not cause ecological damage.
We know it can get mighty complex and cumbersome, but thorough research will save guard you from unforeseen penalties later.
Working from home can seem easiest and hassle-free until you realize you may need additional permits. If you plan to work from home or start an office in your house, you may need the following licenses and permits:
The cost can vary from just $50 to several hundred dollars, depending on whether it is a federal license or a state permit. It also depends on the industry in which your business operates. Some states like Nevada have general business license requirements. That may cost about $500.
Hence, the short answer is that it depends on what permit or license you need, and where you will use it.
As mentioned before, you need to visit the US Small Business Administration page to check if you need a federal license or permit. If you don’t, you may contact your state government’s website or offline offices to apply for the necessary licenses.
Unfortunately, there are no clear answers to this question. It truly depends on how complex your business activity is and where you are making the application.
Some states process licenses and permits quickly, and you may get your documents in days. However, if you operate in a high-risk area such as nuclear technology, the federal government may take weeks to months to give you the licenses and permits you’re applying for.
You could, in theory. However, it makes more sense to start a business and then make an application for licenses and permits around the same time.
Most definitely. You will need not only American licenses and permits but also the licenses and permits valid in the countries where you plan to engage in business activities.
This is one of the most complex steps. You need to assess your business activities and the location where you plan to operate. Conduct research or seek external help. Make connections and telephone calls if the information is not available online. Finally, make a list of the licenses and permits you need.
Every permit and license requires a little paperwork. This means documentation, evidence, and more paperwork. As a result, getting your hands dirty and keeping all the documents necessary in designated files and folders is essential. Keep digital copies of all your records too if needed.
Start making applications for your licenses one by one. The first step should be to register your business. However, if you are a professional, you may need to have a professional license even before you think of starting a business. Nevertheless, start applying for those permits and licenses.
Getting a license is not enough to get business traction. Use your licenses to market yourself. Proudly state that you are a licensed business owner with all the permits necessary. This gives customers and clients the confidence they want to do business with you.
Business owners often overlook license expiry dates and hence forget to renew their licenses and end up paying penalties. Late renewals may cost more, and you may also have to make fresh applications. To avoid these cumbersome scenarios, it’s best to set reminders and renew your licenses before they expire.
If you are a small business owner or are planning to be one soon, you probably are one of the most brilliant individuals to walk this planet. Running a business can be an incredibly satisfactory and enriching experience. Besides, it helps you generate revenue for yourself and income sources for your staff and their families. In short, running a business is a highly fulfilling experience.
However, for this experience to remain fulfilling and satisfactory, and to operate peacefully, you must gather all the required business permits and licenses. You will also need to renew them before they expire. Make sure to get your documents in order and gather all the permits and licenses required to be a successful business owner.
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