What Type of Business License Do I Need?
When you start a new business, you may be required to register for certain business licenses and permits before you can open your doors. There are specific Business Licenses, Permits & Tax requirements by your state, and being out of compliance can mean a big headache for you. This article will get you started in determining if you need a license, what type of business license you need, as well as where to get a business license.
Types of Business Licenses and Permits
Not every type of business needs a business permit or license, but if you’re involved in the following types of work, you likely will be required by your state to get one:
- building contracting
- child care
- food preparation
- ground transportation
This is only a partial list; it’s important to check with the Small Business Association and your state business licensing entity to find out which pertain to you.
Home-Based Business Licenses
If you plan to work out of your home, you’re not necessarily exempt from needing to register a business. Depending on how your neighborhood is zoned, you may need to obtain a Home Occupation Permit, which will allow you to conduct certain types of business out of your home.
You may also need a trade license, such as a child care license or cosmetology license. You would need this whether you worked out of your home or in another type of facility. And if you plan to sell items from your home-based business, either online or offline, you may need a Sales Tax Permit.
It’s a wise idea to do the research before you set up shop in your house, including checking with your Homeowner’s Association to make sure you stay in compliance with any regulations or laws that relate to the type of new business you’re starting. It’s better to find out ahead of time that you have hurdles to jump over rather than once you’re up and operating.
Why You Need a Business License
You may think “no one will ever ask to see my business license! Why should I bother?”
Here’s why: if you plan to open a business bank account, you may be asked to present a copy of your business license. If you plan to seek financing, you’ll need to provide it as well. And if you operate one of the types of businesses listed above, it is likely an inspector will come by to make sure your facility is up to code and that you have your business license or permit clearly posted. If you don’t, you risk being fined, or worse: shut down.
What a Business License Costs
Typically, business licenses aren’t outrageously priced. Costs will vary from state to state, and from industry to industry, but many are around $20 to $200. Make sure to find out if there is an annual renewal fee you’ll need to pay when you apply for your business license.
Before you start a new business, do your research on what types of business license you will need to have beforehand. Budget in the cost for the license as well as the time it will take to have your application processed. Don’t plan to open your business’ doors until you have that license in hand, otherwise you risk being shut down. Stay in compliance and on the safe side of the law, and you’ll thrive with your new business!