When you're starting a business, your to-do list is seemingly endless—from market research to product selection. One task you cannot afford to ignore is obtaining the proper small business permits and licenses.
The consequences of not having the right licenses and permits for your business can be quite severe, ranging from forced closure to various fees and fines. You could also be opening up your business and yourself to litigation, loss of reputation, and loss of credibility.
Notably, not all small business permits and licenses apply to every business. Which ones you need depend on your business location, type, and industry.
Here are five licenses or permits that new business owners sometimes overlook.
1. General business liccense
Many jurisdictions require that businesses operating within their bounds obtain a general business license. This provision holds true whether you have registered your business as a limited liability company (LLC ) or not.
This requirement also applies to businesses that have registered a "doing business as" (DBA) or fictitious business name. That is, just because you have appropriately registered a DBA doesn't mean you don't also need a state, county, or city business license.
2. Sales tax permit
If your state charges sale tax, your business needs a sales tax permit for any goods you sell. Even if you operate solely online, your home state will still consider that you have a "sales tax nexus," or a significant business presence in that state, that requires you to obtain a sales tax permit.
Practically speaking, this means that you must not only have a sales tax permit but also collect sales tax on every sale you make to a buyer in your state. If you're not sure whether you have sufficient business presence in your state to constitute sales tax nexus, consult your state tax authorities or your accountant.
3. Fire department permit
A fire department permit helps ensure the safety of a location so that too many people aren't gathering in one spot at once, which could create a fire hazard. If your business will likely involve several people assembling—such as a daycare center or café—you may need a fire department permit.
Generally, you must obtain a fire department permit if a specified minimum number of people will likely assemble at your business. Because this minimum number varies from jurisdiction to jurisdiction, you should check your local fire department permit requirements to be sure you're in compliance.
4. Home occupation permit
Home-based businesses are common, but just because you run your business from home doesn't mean you don't need permits.
Many cities and counties require home-based businesses to obtain a permit—usually known as a home occupation permit. Check with your city or county government on local rules.
5. Health department permit
A health department permit is typically issued by the county health department and is necessary for a business to sell food and beverages that are cooked or served to the public or to operate businesses that come into contact with the human body. The permits help ensure safety, and local regulations specify the types of businesses that must obtain them.
Types of businesses that require such permits include the obvious like restaurants and food vendors, but less obvious examples include waste haulers and nail salons. Sellers of prepackaged foods and beverages that don't involve processing generally do not need health department permits.
Note that if you have a brick-and-mortar business, you may also need a sign permit to advertise outside your location. Regulations may restrict the type of sign, size, and location.
Once you've determined the permits and licenses your business needs, you should apply for each permit and license through forms usually found online. If you're opening a business and you're unsure whether you have all the business licenses and permits you need, take steps early to ensure your compliance and avoid issues down the road.