Your Business License--Why You Should Get One and How

Making sure your small business enterprise is meeting all licensing and regulation requirements is a necessary part of your startup, and the appropriate business license will help you comply with local and state laws. The right business license can also help you manage your taxes and revenue streams efficiently, and you're less likely to encounter penalties and costly fees as a result of non-compliance. As a smart entrepreneur, it's essential that you have done the research about licensing your business well before operations begin. Some cities and states have strict zoning laws and processes in place that can have an impact on your ability to make a sale, open a bank account, and report revenue.

A business license ensures that your business is registered with the state and county that it was founded in, and gives your business a legitimate business ‘presence'. If it is an online-only business, each state has various licensing and permit applications that must be completed before issuance of the business license. Brick-and-mortar stores, restaurants, and retail venues will require a seller's permit. Newly built offices may need to meet zoning laws and requirements in order to be approved. In each situation, a business license can ensure that you are operating a legal and legitimate enterprise, and do not incur any fees or charges imposed by the city or state.

First, you will need to obtain the formal application. This can be found easily on the web, and the process will vary by city and state. A business lawyer or accountant can help you track down the physical application specific to your state or county fairly easily.

After the application has been submitted, it will be reviewed by a committee. If the application meets the conditions, it will reach an initial approval status. After this step, there may be a series of permits required. Restaurants and retail establishments in particular will need building permits, food licenses, liquor licenses, and disposal permits that all meet the city's standards.

To obtain a local license, the city hall and county government offices will manage the paperwork. You will need to take along your business paperwork that may include your business plan, the formal business name, and the Employer Identification Number. State licensing information will be sent to the head office specific to each state. Many businesses overlook their state tax license; this is approved by the State Franchise Tax Board, and will ensure that you can charge and report sales tax appropriately.

Keep in mind that there are some serious ramifications of not getting your business license. Without obtaining the necessary licenses and permits before operations, your small business can be at risk for fees, penalties, and even closing. Without the right approval, you will be unable to open a new location, and may be stuck with a set of penalties and fees that have a damaging effect on your personal property. Your business may also be limited in selling a particular goods and services, and the location can be locked and closed for a period of time.

It's essential that all licensing and permits are reviewed during the business plan drafting stages. Each state will vary in fees and the application process can be lengthy. Planning and preparation are important in making sure that your business can open and start operations right on schedule!