Are business licenses necessary for small businesses?

In order to get a small business off the ground, there are a number of requirements that must be met. Getting a federal tax ID to open a business bank account, incorporating or creating an LLC, and applying for trademarks to safeguard the company’s names, slogans, designs, and emblems are a few of these things.

A company license is yet another need for small firms. Are business licenses necessary for small businesses? Yes, it is possible to lawfully run a business. Here are some things business owners should know about license renewals, what this means on the federal and state levels, and how to decide which licenses your company requires.

A business license is what?

A business license is a licence that can be obtained from the federal, state, or local government. By obtaining this license, your startup will be permitted to operate locally. You can keep the business in conformity with the state once you have obtained this license from the appropriate granting body and paid a nominal cost.

Small enterprises frequently have multiple business licenses. The majority of small firms are required to get licenses and permits from federal and state agencies, according to the U.S. Small Business Administration (SBA).

State vs. Federal Licenses

How can you tell if you require a state or federal business license? Businesses engaging in commercial operations that are subject to federal agency regulation must possess federal licenses.

Consider the scenario where your small business uses an oversized vehicle. According to the SBA, this kind of commercial operation falls within the transportation and logistics category. As a result, the U.S. Department of Transportation would be the place to go to get company licenses.

The spectrum of commercial operations covered by state licenses is greater. For instance, small firms in the restaurant or retail sectors are required to seek licenses and permissions from the state. These licenses and permissions are frequently particular to your business’s location, including the county, city, and state, and industry. For a complete list of the licenses and/or permits your company needs to apply for and get, contact your local secretary of state.

Licenses for Common Businesses

Licenses for businesses come in a variety of forms. The ones that your company ultimately applies for will depend on its requirements and geographic location. However, there are a few standard business licenses that apply to numerous different enterprises.

License for general commercial operations. All small enterprises that run physical stores must have this license. A general business operation license certifies the organization’s legal right to conduct business in a particular area. Similar to this, eCommerce companies are urged to get this license in order to legally operate in a certain city, county, or state. A minor cost must be included with your application in order to renew the license. (We’ll go into more detail about renewals shortly.)
License for sales tax. Businesses who sell taxable goods or are situated in an area where sales tax is levied are required to have this license.
owner’s permission. Nearly all states require businesses that conduct online sales to submit an application for a seller’s permit. It’s crucial to remember that businesses that offer digital or other intangible goods or services must still have a seller’s permit.
health permits. Is your company a service one, and is it accessible to the public? If so, a health license is required. This license guarantees that the company is complying with all regulations to protect the health and safety of visitors to the area. Hair salons, nail salons, restaurants, pubs, and gyms are a few examples of establishments that may submit an application for a health license.
As you apply for these licenses and any other ones your company could want, don’t forget to pay the filing fee and send the finished application to the right issuing office.

Do I Need a Business License Renewal?

A good query. There may be a few exceptions to this rule, but generally speaking any business license you seek for and acquire needs to be renewed on time. A minor annual charge must also be paid while renewing a license.

What happens if your business license isn’t renewed? You could be charged a penalty fee for your company. These costs could go into the hundreds of dollars or even thousands. To maintain your company in compliance, it’s a good idea to renew any unpaid business licenses before the deadline.

How Do I Begin the Business License Application Process?

The easiest piece of advise is to work your way up from the city or county where your firm is located.

For information on the licenses your company need, get in touch with the Secretary of State in your area or a nearby licensing body. Next, ascertain whether any federal or state licenses may be necessary for the business activity. You can start applying for these company licenses once you have a firm grasp of the licensing criteria in your jurisdiction.