Startups are enthusiastic endeavors that want to dive right into the thick of it. During the initial phases, you are energetic and pumped up to get as many things off your checklist as you can. But specific rules need to be followed before you can actually open your business doors.
One of the most important aspects is to acquire the right kind of business license. Sometimes, a specific license to your business is enough, but frequently, it can be more than one. So, if you want to learn more about how to get business licenses, let's start.
Different Types of Business Licenses and Which Ones Do You Need?
When it comes down to the core of the matter, there are two big categories. The first one is named Business licenses, which government agencies issue. They are provided typically at either the state level or local city municipalities’ level.
The 2nd category of business licenses is which professional organizations authorize the permits and hand them out that allow certifications for your business to be able to work.
If different types of licenses confuse you about which ones your business requires, we recommend consulting an expert or talking to a government representative. It is highly critical to understand that business licensing is there to adhere to essential rules.
Any license issued is there to help the business work under guidelines and make it easier for your business to stay safe and secure.
Following are the six most common types that you need to know when you look up business license.
Business Operating License
Depending on your state, you may get these licenses from your county or state. These are the most generic types of licenses for most businesses and are the most common terminology that many throw around.
Seller’s Permit
This type of license is necessary for people who sell things, items, or products. You can sell them yourself in a physical shop or sell them online through a platform. Both of these scenarios require a seller’s permit.
The DBA License
DBA or “Doing Business As” is the permit you need if you don’t want to share the actual name of your business and operate with a pseudonym. No matter the cover name you use for your business, you must indicate the actual name of your business to the authorities when you apply for a business license. Based on the county or state you are starting the business in, the situation or documentation may change.
Special Permits
These permits are additional permits your business requires based on your location and especially hold true for physical stores. Regarding aspects such as zones and location, you need to have the permit to align different zones, essential signs, or other things such as fire hazards and other safety protocols.
License for the Industry
These types of business licenses are required for the service industry, such as childcare, spa, regular salons, law, medicine, etc. Approach a licensing or authorization board to acquire these licenses.
Federal License
These licenses are limited to very few exceptional businesses, such as alcohol sales and distribution, firearms, etc. You can get more details about the requirements of these types of businesses through the Small Business Administration.
How Do You Get Business Licenses?
As we have mentioned in the previous sections, the rules for getting business licenses may change from state to state. Nonetheless, here are some common and generic steps that are involved in this process.
Forming An Entity
The first major step after the naming of the business is to give it structure, such as whether you are a sole proprietor or going into a general partnership. These structures define how you will be taxed or which rules apply to you. Following are the other structural entities.
- Limited liability company (LLC)
- Corporation
- Nonprofit corporation
Tax Identification Number (TIN) Application
Most businesses require this number to be assigned to each employee that they hire, making it easier for taxation. If you are the sole proprietor, then you can instead use your SSN.
Learn Which Business Licenses You Require
As we said before, based on your business type, state, legislation, or locality, you may need different licenses. There are many resources available on the government website which can tell you in detail what you need.
Typically, you can get more information from different resources such as the Small Business Administration or the Secretary of State offices.
Applying for the License
Some of the details we have mentioned above are that the authority will give you your business license based on several factors. You can quickly get this information from your SBA office.
Renew Your Business License
Each business license has separate requirements for renewal, such as how long after you need to be re-evaluated, when the audit is due, and so on.
How Much Does a Business License Cost?
It can range from just $50 to $200 based on the complexity of acquiring your license or the state you are in. Sometimes, if you don't need a specialized permit, you don't even have to pay.
Pro Business Permit Tip
No matter the type or scale of the business, you should be aware of your responsibilities and benefits. To understand most of what we explained, you should always consult an expert. The expert can either be from the government or can even be from a 3rd party association that provides such services.
Final Words
Some might think that getting a business license or permit is a complicated process. Still, it actually isn't. First of all, if all your documentation is correct, you can get a business license within 24 hours. In some cases, if you haven't fulfilled the requirements, the agency will guide you in fulfilling those requirements.
You can also hire a licensing agency that helps you fulfill these requirements and get the necessary paperwork ready because they are experienced in them.
