When you’re so caught up in the excitement of stating a new business, it’s so easy to forget that you need to get the business licensed and certified and get the necessary permits. It’s very important: qualification and certification. No business owner likes getting licenses and permits – but it’s something that simply has to be done. Not getting a license or a permit is one of the biggest mistakes you can make as an entrepreneur.
The fact is every business needs a license to operate legally and freely. The regulations vary from one business to another – any failure to comply with them can have consequences that you have not prepared for. The good thing is, it’s easy to get a business license, particularly if you are based in North America or Western Europe. It’s inexpensive, and doesn’t really take up too much of your time.
Let’s see how to get a business license.
Know the Requirements
First, you should know where to get the business license from. You should get a local business license – from the city where you plan to start your business. You will require a business license whether you plan to rent an office for your business or even if you are going to run it from home. Regardless, your business has to be licensed in the place where it is located.
Now, every major city in the USA or Canada will have a database of the addresses that fall into a municipality. Just do a simple Google search “City name + business license” to know where to get your business license from.
You can also this information from the US Small Business Administration (SBA) website [www.sba.gov]. You will find a lot of information on this such as where to get licensed in your area and industry.
Second, find out about your business code. Every business type will have a code that is specific to it. You will need to apply for each business code using a separate process, and meet certain specific requirements. Now, do you want to start a corporation or do you want a simple DBA – as Assumed Business Name? Regardless of how you want to structure your business, your local city administration will have a form or it. Download the forms from the website and fill it up. You can also get these forms from the City Hall, where you will need to pick them up in person.
Apart from the basic forms required to be filled up for the business license, you will need to apply for permits and fill out other forms as well. For example, if you are starting a home business and this requires a significant remodeling of your home, you will need to get permits from the relevant authorities. Each form you download will have links and specific information that are relevant to a given situation. Look them up.
You can fill out the form online or have them printed out, so that you can fill them up by hand. Basically, you will need to enter information about the following….
- The type of business you are setting up
- Your physical business address
- Name of business owner
- Contact information
- Federal ID number
- Number of employees
Getting a Business License
Once you fill out the forms, submit them to the relevant authorities, where it’s the city’s local business administration or the finance department. The city’s official well site will have information about where to submit the application.
Next, pay the submission fee. Every city has its own requirements for the submission for a business license. This can be from $100 to $500 depending on the type of business that you plan to start.
That’s it, wait for your license. This can take time depending on the type of business entity that you plan to start. Starting a sole proprietorship doesn’t take long. A DBA hardly takes one or two days. A corporation, on the other hand takes a couple of weeks. This varies from state to state.
Once you receive the message that the license is ready to be picked up, pick it up in person and identify yourself as the business owner. You will be asked for your fingerprints as well.
Finally, follow the ordinances that are relevant to your business. It’s very important that you follow all the rules laid down by your city. For example, if you start a restaurant, you will need to take a liquor license and get health inspections done.
Once you get your business license, you will need to display it in your business location. If there are any factual errors in the business license, you should get them correctly immediately by the city administration.
Also, if you are planning to start a home business, make sure to find out about the zoning ordinances in your city. Some residential neighborhoods are very strict about not allowing use of homes for a business related activity. If that’s the case with your neighborhood, you should try getting a conditional-use permit, if that’s possible. But generally, authorities are more encouraging towards home-based businesses in North America and Europe today than in the past.
Here are some of the common business licenses and permits a small business owner may require.
Fire Department Permit
You will need a permit from the fire department particularly if your business uses any inflammable materials or if your premises are to be kept open for the public. Some cities have made it mandatory to get this permit before opening the business. In other cities, you don’t need a fire department permit, but need to get your premises inspected by officials from the fire department on a periodic basis. If your premises are safe enough and meet all the fire safety regulations, you will be issued a citation. This is very important for businesses such as day-care centers, retirement communities, restaurants and or any business where a lot of people, including children, get together.
Air and Water Pollution Control Permits
Most cities require businesses to take steps to check air and water pollution. If you burn anything in your business or discharge anything into the sewerage system, or if you use materials that release CO2, you will require an air and water pollution control permit from your city. You must adhere to the strictest environmental protection regulations and get your business approved before any construction. Do check with the local environmental protection agency about the federal and state regulations that you will need to follow.
Health Department Permits
If you have started a restaurant and sell food directly to customers, you will require a county health department permit. This isn’t difficult to get as long as you have followed all the rules. Your restaurant will be inspected by officials from the health department who will advise you about the additional safety measures to be taken.
There are certain businesses – such as a locksmith business – for which you must obtain licenses and occupational permits from your state. This means passing state exams so that you can be issued these permits. Typically, states require plumbers, mechanics, electricians, building contractors, locksmiths, insurance agents, collection agents, stock brokers, real estate agents, doctors, dentists, barbers, etc. to get licensed and get the necessary state permits before starting their business.
As a small business owner, you don’t have to worry about federal licenses. Generally federal licenses are given to major radio and TV stations, investment firms, food processing factories etc. But if your business requires a federal license, do get in touch with the FTC or Federal Trade Commission.
Sales Tax License
If you have a home-based business that sells taxable goods and services, you will need to pay sales tax on each sale. Whether your service is taxable or no depends on your state. Sales taxes differ from state to state, so ask your local administration for more information on this. You must obtain a license or permit to be able to start a business or to pay the sales tax.