When you're starting a business, there are so many things to take care of: from market research, business structure decisions to product ideas and more, the tasks can stretch before you, seemingly endless. Overnight, your to-do list might double or even triple in size. In the face of all of this, it can be easy to accidentally let some things slide.
Obtaining the proper small business permits and licenses should not be one of those things you let slide, though. The consequences of not having the right licenses and permits for your business can be quite severe, ranging from forced closure to varying fees and fines. Not having the right business permit or license can also potentially open you and your business up to lawsuits, loss of reputation and loss of credibility as a business.
Not all small business permits apply to every business; the permits and licenses your business needs will depend on where your business is located, what your business is, and the type of industry you're in. Research is required, but when we get busy, we may decide to rely on our assumptions rather than solid research. Here are 5 business licenses or permits that people starting up a business sometimes overlook:
1. General business license. If you're like many people contemplating starting a new business, you've probably spent a lot of time researching the various business structures and deciding which is the right structure for you. If you chose to register a business as an LLC, you may feel confident you now have what you need to begin operating your business.
However, registering your business as an LLC doesn't mean you won't have to obtain a general business license if your city or county requires it. Most cities and counties do require that businesses operating within their jurisdiction obtain a general business license, and as an LLC you will still have to apply for such a license.
This also applies to businesses that have registered a "doing business as" name (also known as a fictitious business name). While you're required to do so if you want to operate your business under another name that's not your own legal name, a DBA registration doesn't mean you won't also have to apply for a general business license if the city or county in which your business is operating requires it.
2. Sales tax permit. While most owners of offline bricks and mortar businesses selling goods know that they'll likely have to obtain a sales tax permit if their state charges sales taxes, if you're the owner of a business which sells online goods you may not be aware that you may also need a sales tax permit. After all, you may be thinking to yourself, you'll be ringing up sales from all over the country and not just in your state, and you know you won't be responsible for collecting sales taxes on everything you sell.
However, if the state in which you operate your business charges sales tax, you'll have "sales tax nexus"—that is, a significant business presence in that state. What this means is, if your state collects sales tax, you'll need to apply for a sales tax permit and collect sales tax on every sale you make to a buyer in the state in which you have sales tax nexus. If you're not sure if you have sufficient business presence in your state to constitute sales tax nexus, contact your state tax authorities to check.
3. Fire department permit. Your business doesn't use, store or otherwise require handling of flammable materials, nor do your business activities and processes result in hazardous conditions, so you may not have given any thought to the necessity of obtaining a fire department permit.
However, if your business will likely involve several people assembling in one place—for example, if you run a daycare, or you have several employees working in the same location, you should check your local fire department permit requirements. Many authorities require that a fire department permit be obtained if a specified minimum number of people will likely assemble at your business; this minimum number varies from jurisdiction to jurisdiction.
4. Home occupation permit. Many people today are starting up home-based businesses; compared to leasing a business location, the costs are minimal. Because operating a business out of your home may not feel as formal as starting a more traditional business, you may not be aware that small business permit and license regulations apply to all businesses, including home-based businesses.
Many cities and counties require home-based businesses to obtain a permit usually known as a home occupation permit. If you're not certain if you need such a permit for your home-based business, check with your city or county government.
5. Sign permit. As a new business owner, you're quite aware that the phrase "build it and they will come" isn't really applicable to most new (or existing) businesses. You've likely put together a comprehensive marketing and advertising plan, but if one of the items in your plan requires the use of signage of some kind, you will need to check with your city government to see if a sign permit is required.
Most local authorities have ordinances regulating signage, and in addition to sign permits, there may also be regulations relating to the type of sign that can be used, maximum dimensions and where on your property a sign can be displayed.
How to Get a Business Permit
These are just some of the business permits and licenses which might be overlooked as you tackle all the things that need to be done to get your business up and running. The first step in getting a business permit is to determine exactly what permits and licenses your business requires.
Once you've determined the permits and licenses your business needs, you'll need to obtain the forms necessary to apply for each permit and license. You can often find these forms on government websites online, and they can also be obtained directly from your state or local authority's business offices.
After you've filled out the required forms, you'll need to file them with your state or local authority. Often you'll have the option of doing so online; other options include mailing them in, or submitting your forms in person. There is also usually a business permit cost, which will vary depending on your state, city or county.
While the process of obtaining the proper business permits and licenses may seem tedious during the early, busy days of starting a business, the consequences of failing to obtain a necessary license or permit can be severe. By setting aside the time necessary to do the research, you can help avoid any future mishaps that may occur as a result of not having the proper business permit or license.
If you need business permits and licenses for your business, LegalZoom can help you obtain them. Our partner, BusinessLicenses.com, can help you determine the permits you need and help you file everything you need to get started.