When you're caught up in the excitement of starting a new business, it's easy to ignore the need for licenses and permits. However, licenses and permits are mandatory, and before you can legally begin to operate your business, you need to have all its licenses and permits in place. Additionally, if your business has employees or sells taxable goods or services, you need to register with the taxing authorities. Requirements vary by industry and depend on how and where you conduct business.
Who Issues Business Licenses?
Business licenses, permits, and tax registrations are issued and administered by all levels of government, federal, state, and local, which includes county and municipal governments. In many cases you may need licenses on each governmental level. Furthermore, there are various agencies and departments involved in the licensing process.
There are over 40,000 separate licensing jurisdictions in the United States, and each has its own particular licensing requirements.
Why are Business Licenses Required?
Licenses are required for three main purposes:
What are the Pitfalls of not Being Licensed?
Not being compliant with all licenses, permits, and tax registrations could leave you unprotected legally, may lead to expensive penalties, and can jeopardize your business.
With pressure against raising traditional taxes, governments are always on the lookout for alternative revenue streams, which means ever increased vigilance for business license evaders. Many even resort to hiring third party collectors. The pitfalls of not being properly licensed include:
What are some Common Licenses, Permits, and Tax Registrations?
Common licenses, permits, and tax registrations that a business may need include but are not limited to:
Which Licenses does my Business Need?
If you asked this question, you are not alone. This is a question asked by almost every entrepreneur. While you may want to research the requirements yourself, most people find it impossible to do it on their own. You may contact you local City Hall, but that alone will not help you determine your licensing requirements on the county and state levels, and vice versa. Governments do not offer a one-stop-shop where you can go and get all your licenses, permits, and tax registrations.
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