Startup Legal Issues

Do I Need a Business License?

Business licenses and permits are confusing for new entrepreneurs. Does your business need a license? Yes - the only question is which one(s)?

Many people misinterpret business licenses to be uniform documents that apply to all businesses, regardless of their industry or geographic location.

Do I Need a Business License

But in the real world, business licensing and permit requirements are extremely diverse. Licensing requirements that apply to one business may not apply to another - even if they are located side-by-side.

The process of determining which licenses and permits apply to your startup begins at the local level. Contact your Chamber of Commerce or local government officials to determine which permits and licenses are necessary in your jurisdiction.

From there, you will need to determine which state and federal licensing requirements apply to businesses in your industry. In general, here are some of the most common types of licenses and permits that are required for small business startups.

  • Municipal Business License. Some cities and local jurisdictions require all businesses operating within city limits to obtain a business license. Although city business licenses aren't outrageously expensive, zoning issues may come into play. Before you are granted a license, your application will be reviewed to ensure that the location is properly zoned for your intended use. If it isn't, you will need to receive a variance before commencing operations.
  • State Licenses. State jurisdictions often exert regulatory control over specific professions. If your business relates to construction, real estate, insurance, healthcare, cosmetology or other regulated industries, there's a good chance you and/or your team will be required to maintain state licensing.
  • Fire Inspection Permit. Most local jurisdictions require businesses to undergo annual fire inspections and maintain a valid fire safety permit. Contact your local fire department to learn fire code requirements in your area.
  • Health & Sanitation. Restaurants, grocery stores and other types of business require periodic inspections and a permit from the county health department. If your business Certain exemptions may apply, but if in doubt, contact the local health department for details.
  • Federal Licensing. Fortunately, the federal government leaves the majority of licensing and permit enforcement to state and local governments. However, in a handful of industries (e.g. broadcasting), the federal government plays a more direct role. If your business is situated in an industry that is subject to federal licensing, you are probably already aware of the requirements. If not, contact local business associations for assistance.

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