If you’re thinking of starting a business, one of the first things you’ll need to do is apply for business licenses. This can be a daunting task, but we’ve got you covered. Here’s what you need to know.
There are several different types of business licenses that you may need, depending on the type of business you have. It is important to check with your local government agency to find out what licenses are required for your business. By understanding the types of licenses you may need and the requirements for each, you can ensure that your business is properly licensed to operate.
What are the Business License Requirements?
Business licenses are required if you’re selling products or services.
Depending on the type of business you’re starting, you may need one or more licenses from your local government. For example, if you’re going to be selling food products, you’ll need a food license. And if you’re starting a construction company, you’ll need a contractor’s license.
Each type of license has different requirements, so be sure to research what you’ll need to do in order to get licensed.
What Are the Different Types?
Federal Business License
In addition to any licenses you may need from your state or local government, you may also need to obtain a federal business license. If your small business will engage in interstate commerce—meaning it sells goods or services across state lines—you’ll need a federal business license. If you plan to open a branch of your business in another state, you will also need to obtain a business license from that state.
Federal business licenses are important when you make or sell products that the federal government regulates. This can include agriculture, broadcasting, cargo, and transportation.
Businesses that provide certain professional services, such as healthcare or child care, may need to obtain a professional license from the state in which they operate. In some cases, you may also need to be certified by a professional organization in order to obtain this type of license. Professional licenses are generally more difficult to obtain than other types of business licenses, and the requirements vary from state to state. This license proves you have a certain knowledge and understanding of your job title.
Ranging from accountants to hair stylists, professional licenses normally have to be backed up by a degree, certificate, or test. This license expires and needs a renewal every few years.
Here’s a complete database of occupational licenses in the United States.
State licenses depend mainly on the location and activity of your business. States often regulate more than the federal government, which means they require state licenses for businesses such as restaurants, plumbing, and retail. This varies from state to state, and for different industries.
Some state licenses expire quickly, so make sure you renew your license at the right time. It is harder to apply for a new one once your license expires.
Home Based Business Licenses
If you run your business from your house, no license necessary, right? Not so fast. Many states require a home based business license for specific types of businesses The requirements generally involve registering your business with the state and paying a fee. Any other licenses and permits covered above might also be necessary—even if you operate out of your home. Check with your local government agencies to find out the requirements.
Sales Tax License
If your business sells products or services, your business may require a sales tax license. This is required if your business has a sales tax nexus in a state, meaning you have a physical presence in the state or you sell products or services to customers in the state. Each state has its own tax laws, and also unique requirements for obtaining a sales tax license.
How to Apply for a Business License
To get a license, you will need to fill out an application and submit it to the appropriate government agency. You may also need to provide proof of insurance, pay a fee, and undergo a background check. Once you have your license, make sure to keep it up to date and renew it when necessary. Failure to do so results in fines or your business shutting down.
Starting a business can be a lot of work, but it can also be very rewarding. Before starting, make sure you understand the basics , this will help you hit the ground running and avoid any unnecessary delays or problems down the road.