Local Business License: Everything You Need to Know
A local business license is a documented, legal authorization issued by a local government agency for an entity to conduct business.3 min read
A local business license is a documented, legal authorization issued by a local government agency for an entity to conduct business within the jurisdiction of the issuing local government.
Acquiring Business Permits and Licenses
If you're planning on starting a business, one of the most essential and potentially complicated stages you must go through is the acquisition of local permits and licenses to validate your business. There are several kinds of licenses that you may need, depending on the kind of business you're running. Local agencies and state authorities usually demand more small business permits and licenses than federal government agencies do.
The requirements for local permits and licensing differ widely depending on the county or city and the type of business. Municipal licenses and permits are those required by the city in which the business operates. County licenses are those required for businesses that are located in the unincorporated parts of a county.
If you're looking to run your business in multiple locations in several counties and cities, you'll have to acquire a license in every one of the jurisdictions you're interested in. You have to prepare your mind to deal with processes ranging from registering for taxes to unemployment insurance and occupational licenses.
The Reasons for Permits and Licenses
Some business people think business permit and license fees are simply ways for the government to make money off the business sector, but that's not entirely true. The permit and licensing programs were put in place for the protection of the general public.
Cities have license bureaus that monitor where business is being done and ensure that certain types of business are not being conducted in the wrong places. For instance, a majority of states prohibit the manufacture of certain products, such as drugs, fireworks, poisons, medical materials, and explosives in the home.
Local government agencies, as well as federal and state government agencies, address issues regarding how businesses affect the environment. Some examples are quality of water, quality of air, and disposal of waste. For instance, more and more local boards are concerned with the air quality in their regions and how businesses might be affecting it.
Refusal to adhere to the permit and licensing demands for the kind of business you're planning on running within a jurisdiction can lead to extra fees, penalty-related expenses, or even total restriction from operating as a business until you comply.
Types of Licenses
The requirements for business licensing vary from state to state. However, as a general rule, the following are the types of permits and licenses required:
- State business license: This is used to keep track of business activities for purposes of taxation and to ensure the lawful operation of businesses in the state. In most states, licenses are issued by specially designated agencies.
- Sales tax license: This license is essential for businesses that operate in states that have a sales tax obligation.
- Occupational license: Every state regulates certain occupations and mandates that the professionals performing such activities acquire and keep licenses that authorize them to operate in their professional capacities. For example, medical doctors, structural engineers, lawyers, pilots, and private investigators, to name a few, all require a professional license to operate. Get in touch with your state's licensing agency to find out whether your business needs an occupational license.
- Product sales license: Businesses are required to have sales licenses for the sale of certain products, such as firearms, gasoline, liquor, and so on.
Specialized Permits and Licenses
A business that prepares food for commercial use needs a health permit from the county to operate. To remodel a building or start construction from scratch, an entity must acquire building permits from local authorities to see to safety and affirm that the project adheres to all professional rules and standards.
Depending on what the project involves, such an entity may need additional permits for electrical, plumbing, air conditioning, and heating jobs. It's good practice to talk with a licensed contractor with experience in order to find out what kinds of permit a project would require and how much it would cost to do things according to established local standards.
A savvy business lawyer can assist you with some procedures, such as dealing with the officials of the town where you operate and helping you understand and carry out your responsibilities. It's a good idea to get in touch with a local business lawyer to go over your options.
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