Guide to How to Get a Company License

Starting up a new business is never easy. Apart from having to come up with the right product or services, there are various things you will need to cross off your long checklist before your business is launched. One of them is getting a company license.

It's crucial to determine your state's precise criteria because localities have different license, permit, and zoning laws. Keep in mind that each state has its variations of the fundamental license and permission requirements.

In this article, we'll provide you with the most crucial information that any new entrepreneur should know when it comes to licenses and permits for starting a business.

What Is a Business License?

Getting state-issued business licenses can be difficult. It may be necessary for you to apply for more than three licenses in order to start your firm. One small mistake or forgotten item can cause big problems down the road.

Business license is a pretty general term. It can encompass various licenses, depending on your sector, location, and type of business. The document that authorizes you to conduct business in a particular area, usually one that the agency monitors and controls, is referred to by this word.

For instance, you can obtain a business license from a county government department to operate within the county.

It might be as close to home as the city where you intend to conduct business. Most enterprises must obtain multiple licenses, including those from the state, counties, and even cities. Depending on the goods you're selling, you might even require a particular seller's license. The general phrase "business license" also applies to this license.

Types of Business Licenses

When talking about business licenses, keep in mind that a variety of those exist. That is why it's essential to inform yourself about the specific business license you need from the federal government, county, or city to make sure your business structure is progressing.

Knowing how to get a business license that is right for your business not only saves you time, money, and energy but also allows you to understand the requirements for businesses like yours in the industry.

General Business License

Every kind of business, even those operated from home, needs to get a county or city business license. The bearer of this fundamental license is permitted to conduct business within the local jurisdiction.

You can get information on obtaining a basic business license at your local tax office if your city or county does not have a dedicated business licensing department.

Aside from getting a standard business license, be sure your company abides by zoning laws in the area. In certain cases, this is certified at the time of license application; however, in other cases, you will need to confirm with the county or city zoning department.

Local Business License

You might be able to obtain all the license and permit information you require in one location, such as the city or county clerk's office, depending on the city in which you conduct business.

You might have to get in touch with certain offices or agencies one at a time in smaller towns and cities.

To obtain a local business license, these are the steps you will need to follow:

1. Learn your local business license requirements.
2. Gather all required documents for your local business license.
3. Apply for the right business license.
4. Renew your local business license on time.

Health and Safety Permits

The local fire department may require an inspection and a permit, depending on the kind of business you plan to run. This is usually necessary if clients or customers physically visit your house to conduct business.

If your home-based business solely offers products or services online, it's typically not required unless you maintain a stock of potentially combustible items on hand.

Permits from the health department or environmental licenses are less prevalent for home-based businesses. Businesses that sell food and beverage items at retail or wholesale are typically obliged to have this documentation.

In any case, it's simple enough to inquire about if your company needs a permit or an environmental inspection by contacting the state environmental protection authorities or the local health departments.

Professional License

Some home-based enterprises necessitate professional qualification or state or federal licensing. This covers businesses such as daycare facilities, salons for hair styling, law firms, and financial consulting services.

Reaching out to your state business office is the best approach to guarantee that you receive the correct paperwork.

A list of all professions and enterprises that need professional licenses may be found on the state's official website.

Sales Tax License

In certain places, a standard business license may include a sales tax license. However, some cities will also require a separate sales tax license and a municipal business license.

Are you unsure if you require a different tax license? If your business requires a separate sales tax license, the local authorities can advise you on where to obtain it at the state or municipal level. Before you launch your company, be sure you have things taken care of.

Difference Between Business Licenses and Permits

Knowing how the licensing and permitting procedure operates is probably a good idea before you do anything. Permits and licenses are different, yet many people confuse the two and distort their definitions.

Governmental organizations grant licenses. They are a kind of legal agreement that permits their bearers to carry out activities like operating a business or driving a car that would otherwise be illegal for persons who do not have them.

The issuing government regulates these activities, usually at the state level, and the relevant authorities, such as a federal agency, are responsible for issuing these licenses.

Contrarily, a permit is a legal document that gives you the authority to perform your business activities. For example, if you possess a license to operate a café, you may need to obtain a construction permit from your state or municipality.

This permit verifies that the building you plan to occupy is appropriate for your business. If you plan to serve food to customers from a kitchen, you will additionally require a food service permit.

How to Get Your Company License

You must register your company with local, state, and federal regulatory bodies in order to get a license.

1. Register Your Business

The first step in making your business official is registering it once you've decided what it is. Then, you will have to choose one of the following business structures for your business activities:

• Sole proprietorship
• S corp
• Limited liability partnership (LLP)
• Limited liability companyƒ (LLC)

2. File for an Employer Identification Number (EIN)

You must submit fundamental business information, such as the legal structure, goals, and ownership data when applying for an EIN. Getting an EIN makes filing taxes and other administrative duties easier and is necessary for a number of licensing processes.

3. Get a Federal Business License

Companies that work in specific industries need to obtain a federal license. Companies operating in eligible industries must get in touch with the relevant government agency.

4. Get State and Municipal Licenses

Consult with state and local authorities after resolving any issues related to federal licenses. Although certain locations have different requirements, you will often need to collect company and personal data, pay fees, and fill out and submit papers.

5. Renewing Your Business License

Most licenses need to be renewed on a regular basis. You must renew every year in some states and every three years in others. Certain renewals are fee-based, while others are not.

In either case, it's critical to renew your business license to be able to continue with your business activities. There may be fines and infractions for a business license that has expired.

Business License Cost

Regarding the expenses, these can differ significantly based on the industry and region. The license costs will range anywhere from $50 to $300 dollars.

Sales tax is only necessary for specified kinds of enterprises and structures, and it varies by state, more especially by city and county. Most states also mandate annual reporting requirements or annual fees in addition to company licenses.

Keep in mind that the application fee for each state and city will be different. Not only that, additional fees might be necessary to pay as the licenses and permits vary depending on your business activity.

Other Factors to Consider for Your Business Operating License

Obtaining a federal business license involves several more steps. Keep in mind that your local government will also have a say on the licenses and permits your business requires.

These are typically the documents you will need to present to meet the licensing requirements:

• Legal business name
• Business address
• Business phone number
• Employee identification number (EIN) or social security number (SSN)
• Business plan
• Tax documents
• Proof of insurance

That is why it's important to gather all these documents before you decide to register your business. Any license issuing agency will have requirements your business must meet. Don't forget that any special license might also be required from your state agency or local jurisdictions.

Another thing to keep in mind is that some of these licenses and permits need to be renewed annually to allow businesses to sell goods.

Conclusion

You need a business license to operate legally. Luckily, each state and city provides clear instructions on how to register your business and obtain a state business license. When it comes to local agencies, your business might comply with a different set of safety standards and measures, depending on the nature of your business.

To get a business license, the best thing to do is follow our steps to open your business. Keep in mind that the state business license will not replace local licenses.

The operating location of the business, the business structure (e.g., sole proprietor or LLC), and other factors will indicate which licenses and permits you need.

Once you need a business license, make sure you already have your documentation ready. Wasting time and money in the starting phase is what most businesses are struggling to avoid.

Frequently Asked Questions

What Type of Business Licenses Do You Need for Starting a Business?

If you need a business license, it's important to meet all licensing requirements. This goes for local, state, and federal levels. Your commercial activities and business information will dictate the path of how to get a business license. Getting a general business license is very different from other types of licenses. Make sure you comply on a local level once you've gathered all permits and licenses at the federal and state levels. Business owners of small businesses are no exception to this rule.

Who Issues Business Licenses?

Business license application is being done on three levels: local, state, and federal. Federal agencies will have different requirements for a federal license than state and local governments. Local regulations can differ significantly from one city to another, so make sure you check everything before applying. One such thing is the personal income tax.

How to Get a Business License for Your Business Structure?

To get a business operating license, you will need to choose a federal business structure. Follow the registration process to obtain all necessary licenses. Keep in mind that the nature of your business will indicate the type of local and federal licenses you need to, for example, sell online or open a restaurant.

Do You Need Local Business Licenses If You Have a Limited Liability Company?

If you choose a limited liability partnership (LLP) as a structure for your business, you will still need to obtain licenses and permits. A required license will not be the same for each business structure. For instance, S Corp's requirements will be different from those of a limited liability partnership.