A Start-Ups' Guide to Business Licenses & Permits - Be Compliant from the Get-Go
by Caron_Beesley, Community Moderator
- Created: September 6, 2010, 12:50 pm
Most of us are aware of common business licensing laws; whether i-s a license to sell alcohol and food, or a permit to expand your business premises. But business licensing is a lot more complex and broad than it first appears. For example, did you know that if you choose to quit your day job and set up a home-based business you will need a permit from your local government to do so?
Unfortunately, business license and permit violations occur all the time leading to costly penalties, tax problems, and even the closure of your operation.
So if you are starting a company- be sure not to overlook federal, state and local licensing requirements for you business or industry. Here are some tools and resources you can put to work for you to ensure you are compliant from the get-go.
Get the Right License and Permit in One Simple Step with'Permit M'
Every business has different licensing and permit requirements depending on its location and industry, so it can be difficult to know where to start.
There are actually companies who make a living out of selling business license application packages but these can be costly and are usually unnecessary since much of the information you need to quickly understand and take care of your regulatory obligations is freely available in the public domain.
What About Federal Licenses?
If you operate a business that is regulated by the federal government you will need to be aware of federal licensing requirements such as those that govern alcohol, tobacco, firearms, broadcasting, transportation, and so on.
The Permit Me tool also points to other business and employer requirements that are specific to your industry such as what workplace posters you need to display, the types of business insurance you need, and so on.
What about Tax Permits?
While the IRS doesn't license your business, it does require that certain businesses register to receive a federal tax identification number (this link helps you determine whether your need and EIN or not). You also need to register with state and local government agencies for applicable tax permits such as a sales tax license, income tax withholding, and unemployment insurance tax. The Permit Me tool can point you to your local state revenue office.
Licensing and Permit Guidance for Home-Based Businesses
Home-based businesses often suffer from permit violations, simply because one size does not fit all. For starters you will need a Home Occupation Permit, just to do business out of your home. And depending on your business type, whether you operate an online business, an in-home child care facility or are involved with at-home food production - you are going to need a permit. Read Licensing Requirements for Home Based Businesses for more guidance on these regulations.
If you live in a community managed by a home owner's association (HOA), it's a good idea to check whether they can restrict your business activities, read Can a Homeowners' Association Ban Your Home-Based Business?.
Managing and Maintaining your License or Permit
As with most areas of business law, licenses and permits need to be managed and maintained. Business.gov offers the following advice:
- When signing up for a license, permit or registration, keep track of those that need to be renewed on a regular basis and keep a calendar of renewal dates.
- Maintain a copy of all licensing applications and forms in your business records.
- Make sure you follow rules for displaying your licenses or permits. Most states and localities require businesses to prominently display their business licenses so customers can see them.
- If you are thinking of expanding your business, whether it be expanding your building or launching a new product or service, you may need additional business licenses.
- Business.gov's Business Law Guide provides an overview of business laws and regulations.
- State Government Agencies - Includes links to all state government agencies.
- Essential Government Forms - This directory categorizes forms by what you're trying to accomplish (starting a business, operating a business, etc.).
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- Small Business Insurance - Part 2: Finding and Buying the Right Policy
- Starting a Child Care Business? - Government Tools and Resources that Can Help
- Turning your Handyman Skills into a Profession: Starting a Construction or Home Improvement Business
- Operating a Restaurant within the Law: A 101 in Compliance (Part 1) and Part 2
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General small business tips and tricks.