Types of business licenses and permits
The last thing you want to know after starting your business is that you have not followed the law by not applying for the proper permits for your business. Before setting up a small business, you should pay attention to the regulations of your town, city, and county. In most locations, all businesses require a basic license which is sometimes called a certificate of tax registration. Apart from this, other permits and licenses may also be required.
Business licenses and permits are issued at all levels of government: federal, state, and local (city, county, or town). Depending on the type of business you are running, you may need to apply for licenses at various levels. For example, if you decide to open a restaurant in the city of San Francisco, you will need a business license and health permit from the city of San Francisco, a California state sales tax license, and a federal tax identification number of the US federal government.
Not sure what type of license or permit you need for your business? Well, as always, we have simplified it. Here’s a quick checklist that covers the most common federal, state, and local licenses and permits you may need to purchase before starting your business:
Business License – This is the basic license that you will need to operate a business legally. If the business is located within the city limits, a city license must be obtained; if it is outside, it is purchased from the county. Contact your city’s business licensing department to apply. Also remember that you have to pay an annual fee.
Federal Employer Identification Number (EIN) – Also known as a tax identification number, it is required for almost all types of businesses. Depending on where your business is located, you may also need to acquire a similar tax identification number from your state.
Zoning and Land Use Permits – Before starting your business, you need to find out if the space you are going to use is properly zoned for the type of use you are planning. You may need a zoning enforcement permit. Zoning laws regulate off-street parking, waste disposal, and the size, construction, and location of signs.
Health Department Permits: If your business involves preparing and / or selling food, you will need a permit from the county Health Department. Please note that the health department will inspect your facility before issuing one.
Sales Tax License – This license is essential before you can sell almost any product or service in any state.
Fire Department Permits: Businesses like restaurants, day care centers, or any other that attract a large crowd need a fire department permit.
State-Issued Special Business Licenses or Permits – You may need special licenses if your business involves the sale of certain types of products, including spirits, lottery tickets, gasoline, and firearms.
State-Issued Special Occupational / Professional Licenses – In many states, people in certain occupations must have occupational licenses or permits. Generally, a state license is required for auto mechanics, plumbers, electricians, construction contractors, collection agents, insurance agents, real estate brokers, recuperators, and personal service providers (estheticians, cosmetologists, therapists, and massage therapists) . If you are considering starting any of these businesses, you will need to pass the state exams to get the permit. Contact your state government offices for a complete list of licensed occupations.
Special Federal Business Licenses or Permits – You may also require special business licenses from the federal government if your business involves investment advice, drug manufacturing, meat product preparation, broadcasting, tobacco, alcohol, or firearms manufacturing.
Licensing and permitting requirements for small businesses vary from state to state; Therefore, it is a good idea to contact your state and local government to determine the specific obligations for your new business.