Entrepreneur 101: Business Licenses, Permits…and Why You Need Them

If you are in the process of starting a business, the second most important step is to determine if you need a business license or permit. The first step, of course, is to determine the structure of your business (i.e. Corp, LLC, Sole Proprietorship, etc). But, once that part of the process is complete, then you can move on to step two.

In order for businesses to operate legally and within the guidelines of federal and state laws, entrepreneurs must register their business. The type of license you need will be based on industry, products, and/or services. To help determine this, here are a list of license types and the businesses associated with each:

• Federal license – Alcohol distributors or Liquor stores, Artillery/Firearms shops, Radio stations, etc. 
• State licenses  – Restaurants, Sports Bars, etc.
• Professional license (also referred to as State licenses) – Beauticians, Dentists, Realtors, Physicians, etc. 

When it comes to knowing if your business need a permit, check your local and/or state agency. Permits contain regulations that affect your businesses’ appearance, structure, and/or safety. Several permits types are as follows:

• Seller’s Permits – if you’re purchasing wholesale merchandise for resale
  Building Permits – if you’re remodeling or building commercial space
  Health Permits – if you’re preparing food
  Home Occupation Permits – if you’re running a home-based business

After you have determined what license or permit you need for your business, fill out the appropriate application and file it accordingly. Most business owners will have to send in a licensing or permit fee along with the application. These fees will vary in each state.

For more information on business licenses or permits, visit your local Secretary of State office.

Source: SBA.gov