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Business Licenses: A Necessity for Every Business
Every business needs licenses and permits.
New ventures often run into problems because they haven’t
thoroughly researched which of these they must have in order
to satisfy the legal requirements of their state. If you fail
to secure licenses before starting a new business, it’s
no less than a crime.
There are different types of licenses one requires to start
with, and basically they fall into three categories: local,
state and federal.
Regarding local licenses, if you want to generate a business
of your choice in a particular locality or city, a general
business license is your starting point. It grants you permission
to operate in that particular city, and is usually related
to your tax status. They simply allow you to operate with
confirmation that you’re operating according to the
safety and appearance of the community where you’re
based. In other words, they guard the interest of the public
in your business. You may need a specialized permit according
to your profession: health department permits for food preparation,
for example, or sign permits relating to the appearance of
your business, or even a fire department permit regarding
the health and safety of your company are some of the major
permissions you’ll need to obtain.
For a home-based business, you should be aware that some kinds
of businesses are prohibited from operating in certain areas.
If still you want to trade in that area and your business
is prohibited from it, you can file a petition for a variance.
For all this information, contact your county zoning office
or local governing body.
Concerning state licenses, some occupations require certain
training or education, and professionals need to have license
to operate in these fields. Good examples are doctors, lawyers,
real estate agents, accountants, or even barbers, are required
to hold licenses as evidence that they can effectively and
safely carry out their practices. Many bars and restaurants
need licenses from the state in which they operate. If you
are running a retail business, you need to have an additional
sales tax license. The state agencies or the state department
of taxation usually delivers these licenses, and they have
fixed regulatory measures covering your businesses.
Those businesses that are governed by federal agencies require
federal licenses. The Bureau of Alcohol, tobacco and firearms
and Securities and Exchange Commission, are some examples
of those that need federal licenses. The respective agencies
are responsible for granting the licenses.
For making your business hassle-free, there are certain permits
that can be beneficial. Although they can’t be called
business licenses as such, they are helpful for a business.
- The Federal Tax Identification Number- This is nothing
but an Employer Identification Number (EIN). It’s
a social security number that’s necessary for
your federal tax return filing of the business. Internal
Revenue Service (IRS) is responsible for issuing this
number.
- A State Tax Identification Number- In addition
to EIN, the state tax number is required in some areas.
- DBA- A ‘Doing Business As’ filing is
necessary if you want to operate your business with
a fictitious name or a name other than an official
name. Corporations, LLCs and some state formed businesses
can file DBAs.
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Whichever license
you need, you have to be acquainted with the application procedures
and requirements. You can contact the appropriate state and
local agencies to inquire about these. Obviously it’s
in your best interests to make sure your business is complying
with all necessary legalities and ethics, so your most useful
practice is to keep brushing up your knowledge of the sometimes
rapidly changing requirements .
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