Obtaining Business Licenses

Obtaining business licenses isn't the most exciting part of starting your business, but it's one of the most critical. Most city, county and state governments require these along with permits relevant to your line of business for you to operate legally. The process of getting new business licenses isn't difficult, but you'll need to familiarize yourself with your local and state government offices.

Local Business Licenses
Almost all businesses require at least a county or city license to operate. This general business license recognizes your business as a legitimate enterprise and allows it to operate legally within your jurisdiction (city, town or county).

General business licenses fees are usually low. Application processes will vary based on where the city or county is which you plan to do business. In order to begin your application process, you'll first need to get a federal Employer Identification Number (EIN) from the IRS by submitting a form SS-4 or filling out the online application at IRS.gov.

Once you have your EIN, you'll need to gather all of your business paperwork together, including any DBA documents if the business name differs from the proprietors. Contact your town, city or county government offices to learn which business licenses you need and obtain the necessary application forms. Once you've completed your applications, plan to submit them and pay any processing fees in person-in-person filing is usually required.

State Business Licenses
If your business involves products and/or services that are regulated by the state-if you'll be selling alcohol, for example-you'll need to obtain a state business license. Professionals who provide services that require a certain level of education or training, like real estate agents or physicians, will also need to obtain a state business license. The state agency responsible for issuing your business license may vary based on your industry.

Your town, city or county government offices should be able to tell you if your business or line of work requires you to apply for a state license. If you need to obtain a state business license, the process is similar to getting your local business license.

Contact your state government offices to confirm what the license requirements are and find out how to get the necessary application forms. Complete the application and plan again, to submit it and pay any processing fees in person.

Federal Business Licenses
Only a handful of businesses are required to obtain a federal business license. Like state business licenses, federal business licenses apply to industries that are regulated by the federal government. Selling firearms is one example of a federally-regulated business; financial investing is another. Consider working with an attorney if you're starting a business that requires you to get a federal license.

Sales Tax
Nearly all states require businesses to have a sales tax or other applicable tax license (restaurants and hotels for example, must have a rooms and meals tax license). Your tax license is what permits you to charge the sales tax on purchases through to the customer. Typically, your tax license is issued by your state's Franchise Tax Board.

Types of Permits
Permits are issued by local and state government agencies and are extensions of those agencies' abilities to regulate the safety and even the appearance of the community. For example, in order to hang a sign in front of your shop, that sign may need to meet certain guidelines pertaining to its size and/or overhang onto the street. If your sign doesn't meet those criteria, you won't be permitted to display it.

The permits you need will depend on your local and/or state government and may vary based on the kind of business you intend to operate. Failure to obtain and in some cases display those permits according to instruction, can delay your opening and/or force you to close your doors until the proper permit is obtained and you may be fined.

The permit application process is similar to applying for your local and state business licenses. Contact your local government offices to find out which permits you need along with a list of requirements for each permit. Obtain and complete the application forms and schedule any inspections that may be necessary. Plan to submit your permit applications and pay any processing fees in person.

Some common permits include:

• Building Permit. You may need a building permit if you plan to build or refit an existing commercial space. You'll need to be sure your plans meet the local building codes and comply with any relevant ordinances. Generally, your building permit helps pave the way for obtaining any other permits you'll need.
• Health Permit. If you'll be preparing and serving food, you'll need to obtain a permit from your local health department. You'll need to be sure your equipment and preparation areas meet health department codes. Obtaining a health permit almost always requires an on-site inspection.
• Zoning Permit. If you're renting space for your business, be sure that space is properly zoned for your purposes. New businesses may be required to obtain a zoning permit regardless of whether the building is already properly zoned.
• Home Business Permit. Home-based businesses are often required to obtain home occupation permits. Your local government zoning office should be able to tell you whether this is required in your city or town.