Why You Need a Business License

Why You Need a Business License

by David Polatseck, May 2019

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:

  • To identify your business and make sure you are accountable for your actions
  • To protect the public health and safety
  • To keep track of your finances for tax 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:

  • You cannot open your new location
  • Your location may be padlocked
  • You may be hit with costly penalties and interest, or even personal liens

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:

  • Business License
  • Home Occupation Permit
  • Zoning Permit
  • Building Permit
  • Health Department Permit
  • Sales Tax License
  • Sellers Permit
  • Fire and Police Department Permit
  • Withholding Tax Registration

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 your 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.

LegalZoom to the Rescue with a Business License Compliance Package

LegalZoom has teamed up with BusinessLicenses.com -- a company specializing in business licenses and providing assistance to thousands of small companies as well as Fortune 500 companies -- to provide LegalZoom customers with its Business License Compliance Package.

The Business License Compliance Package will solve your entire business licensing headache. You will receive an individualized package in electronic format, delivered via e-mail, that will provide you with all the licensing applications, forms, associated documents as well as all the necessary instructions and related information.

The Business License Compliance Package includes:

  • An overview of the licenses, permits, & tax registrations required for your business
  • Licensing authority contact information, including name, address, telephone number, etc.
  • Detailed information on how much money to send with each application, and where to send it.
  • The actual license, permit, & tax registration applications & associated documents

Click here to learn more and order your Business License Compliance Package today: My Business Licenses.

If you are ordering a corporation or an LLC with LegalZoom, you will have the opportunity to select your Business License Compliance package with your business formation order.

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