What Happens If Your Business License Expires
This can result in hefty fines and penalties. In some cases, a violation carries criminal penalties, which can include the owner as well as the business.3 min read updated on February 01, 2023
What happens if your business license expires? This can result in hefty fines and penalties. In some cases, a violation carries criminal penalties, which can include the owner as well as the business. Government agencies have the right to shut down a business and seize its assets for failure to comply.
Overview for Maintaining Licenses
An example of the repercussions for not complying with an active license involves the Oklahoma Alcoholic Beverage Laws Enforcement Commission and a restaurant. The restaurant had not obtained the required licenses, so the commission seized all of the restaurant's equipment and supplies used to create its signature craft beers.
Another example in New York City involved a wine store that had to temporarily close due to the renewal process for its license taking longer than expected.
When a business fails to keep its licenses up-to-date, it can get shutdown. This costs your business due to lost profits, but it can also tarnish your reputation with customers.
Information About Renewing a Business License
Make sure your business has all necessary permits and that they are current. If any information has changed since the initial time you got the permit, have that updated as soon as possible. These few hours can save time and trouble down the line.
When it is time to obtain or renew a business license, you may need to contact more than one state or government agency. You may also be required to file for permits and/or renewals in several locations.
In some cases, a business may require semi-annual, annual, or bi-annual license renewals. If the license lapses, it may be necessary to re-apply. Failing to do so may incur fines.
State License Requirements
Some states only require a one-time application for a business license. The license remains active until the owner closes the business. The license does not need to be renewed, so it cannot lapse.
A license may require the business owner to file sales tax reports or other documents on a regular basis. A lapse in filing reports can result in the business incurring additional penalties, interest, and fees.
The state can prosecute business owners if they avoid payments or do not cooperate.
Local Business License Requirements
A city or county may ask business owners to apply for permits and register with the state. The permitting process is a tracking system for zoning requirements and ensures that the business is operating legally according to city codes and laws.
Lapsed Local Business Licenses
It is possible that you are doing business in a location where the local government sends its business owners a reminder statement annually, letting them know that their registration is due for renewal.
When handled properly, the business owner will either return the statement or go in person and pay the renewal fees for the business license for another year. The business owner will receive a license permit to post in their place of business.
Statements for fees that remain unpaid may be sent to the business owner every 30 days. Additional interest or fees are added to the amount owed. If not paid, the business is not in compliance by paying the renewal fee and in violation of local law. This can result in the business owner being taken to court.
Lapsed Professional Licenses
Although a professional license is not a business license, it may be required for an owner to operate certain business types. This can include businesses in trades such as real estate, cosmetology, and law.
A professional license requires that the applicant take and pass an exam to prove they have completed the appropriate educational requirements. Professional licenses are managed by the state. A professional is required to renew their state license on an annual basis, pay the renewal fee, and provide proof of completing continuing education requirements.
When a professional license lapses, the person who holds the license may be required to retake the state examination and pay late-fees before the license will be renewed. Anyone practicing without a valid professional license is doing so illegally. This can result in being prosecuted by the state.
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