Starting a business is an exciting time, but it can also be somewhat overwhelming if you aren’t familiar with the process. There are quite a few requirements to keep track of, including the acquisition of business licenses.
Business licensing can be a tricky process, as there’s a wide variety of licenses and permits that your business may need. Some states require a general business license, and there are industry-specific permits and licenses at the federal, state, county, and local levels.
In this guide, we’ll cover the steps you need to complete in order to obtain the appropriate business licenses for your company.
Understanding the Different Types of Business Licenses
It’s important to note that, when it comes to the matter of licensing, it doesn’t matter what type of business entity you operate. It could be a sole proprietorship, general partnership, limited liability company (LLC), corporation, or another business structure ― business licenses apply regardless of which entity type you own.
Technically speaking, there are two types of business licenses that you may need to get.
First, there is a general business license, which is a license that must be obtained by all businesses operating in a certain area, regardless of their industry. A general business license is usually issued on the local level (county or city), but a few states have their own statewide license.
Secondly, there are industry-specific business licenses. These aren’t one-size-fits-all licenses, but rather licenses that allow entrepreneurs to operate businesses in certain trades. For example, a restaurant may need to get a food safety license, and a transportation company might have to register with the state Department of Transportation.
These industry-specific business licenses are regulated on several levels: by the federal government, your state government, and your local government.
Research the Types of Licenses
Once you understand this key difference between license types, you’re ready to research the licenses you need.
This is probably the most time-consuming step, but thankfully, you only need to do it once. The unfortunate aspect of the licensing process is that there’s no central hub that helps explain which licenses and permits you need ― you will need to track them down on your own.
First, you should determine if you need a general business license. Your state may require one, but it’s more common for the general business license to be regulated on the city or county level instead. As you research whether or not you need a general business license, be sure to consult your state, county, and municipal governments.
Then there’s the industry-specific licenses you’ll need to get for your business, depending on what field your company operates in. Some industries will not need any extra licenses, and others will need several. Your Secretary of State can be a helpful resource for this step. They may have their own licensing board to handle these licenses, or at the very least, they can help you get in contact with the appropriate agencies.
Apply for the Licenses
Once you know which licenses you need, you should apply for them. For federally regulated licenses, you’ll need to apply with the government agency that regulates that industry. You can find these regulated industries and additional information courtesy of the Small Business Administration.
State-level licenses are a little different. If you’re lucky, your state will offer an online portal that helps you find and apply for all the licenses you’ll need, but not all states offer this ― if your state does not offer this resource, you’ll have to do the legwork yourself. Thankfully, you can obtain the necessary applications directly from the board which regulates your industry, at which point all you need to do is fill them out and return them.
For state-level general business licenses, you should keep in mind that not all general business licenses come from the same place. Some states give that task to the Secretary of State, but others issue the general business license through their Department of Revenue once you pay your annual business privilege tax. You’ll make your life easier by looking for the application in the right place.
Of course, with all these applications, you’ll need to pay the applicable fees. These fees can add up, so be sure to budget accordingly.
Maintain Your Licenses
Getting your licenses can take a considerable amount of effort. Fortunately, maintaining your licenses once you have them is simpler. First, you’ll need to remain in good standing by following any regulations enforced by your state or licensing agency. Failing to abide by those regulations could cost you your license, which could, in turn, cost you your business.
Finally, you’ll need to renew your business licenses as needed. No two licenses are exactly alike, either ― some expire every year, others are good for three years, and a few last as long as ten years. Regardless of the expiration date, you are responsible for keeping all your licenses up-to-date.
If the licenses expire, you’ll likely have to get an entirely new license, which is an unnecessary hassle. Plus, it’s usually much cheaper to renew your licenses than to apply for them all over again. Set yourself several reminders about your expiration dates, and you’ll be good to go.
Should You Hire a Business License Service?
If this all sounds like a hassle, don’t worry! There are other options.
Specifically, you could hire a business license service to research your necessary permits and licenses, acquire the applications, and deliver them to you. At that point, all you need to do is fill them out and submit them to the relevant government entities.
Does this option interest you? If so, we recommend checking out what a service like Incfile or Swyft Filings has to offer. You’ll receive a comprehensive business licensing research package that includes everything you need to acquire any relevant licenses for your company, and this service costs $99.
Getting your business licenses is an important, time-consuming process. Sometimes, entrepreneurs fail to understand how many different licensing entities there are at different levels of government, and will fail to acquire the appropriate county- or city-level permits.
Keep in mind when tackling this process that you’ll need to check with the federal, state, and local government bodies, and also find out if your industry has a regulatory body that governs your region as well.
It’s vitally important to ensure that you obtain all the necessary licenses and permits for your business, or you could find yourself operating a non-compliant entity.