What Business Licenses or Permits Do You Need For Your Small Business?
Every state has it’s own requirements but here’s the short answer:
Most businesses will need a business license from your city or town. Usually this is done through your City Hall.
Call them and ask how to get a business license. Basically you fill out some easy paperwork and pay the fee. Normally you’ll need your EIN, or your Social Security number if you have a Sole Proprietorship.
The cost shouldn’t be too bad, maybe $50-$150 depending on where you live.
SOME businesses do not require a business license, such a freelance writers, designers, programmers, virtual assistants, etc. Ask your local City Hall to be sure.
1. Research state and local requirements
Begin by researching the state and local requirements for operating a business in your area.
Simply do a Google search such as:
What business licenses or permits do I need in the State of California?
Requirements may vary depending on the type of business and location. Check with your city, county, and state government websites for information on business licenses, permits, and other requirements.
What You Can Do: Research the requirements in your specific area to ensure compliance with local regulations.
2. Determine your business structure
The type of business entity you choose will impact the permits and licenses you need. A sole proprietorship may have different requirements than a limited liability company (LLC) or corporation. Research the requirements based on your chosen business structure.
What You Can Do: Choose a business entity and research the specific requirements for that entity. There is more on that below in this article.
3. Identify federal requirements
Some businesses may require federal licenses or permits. This is especially true for businesses that are heavily regulated, such as those involved in healthcare or transportation. Research the requirements for your specific industry at the federal level.
What You Can Do: Research federal requirements for your specific industry and business.
4. Obtain a tax ID number
A tax identification number (TIN), also known as an employer identification number (EIN), is required for most businesses. This number is used for tax purposes and is necessary for hiring employees and opening a business bank account.
What You Can Do: Apply for a TIN/EIN through the IRS website here.
5. Apply for a business license
Most businesses require a license to operate legally. The specific license required depends on the type of business and location. Some common types of licenses include a general business license, professional license, and home occupation permit.
What You Can Do: Apply for the necessary business license(s) through your city or county government. Call ’em up and ask how to proceed.
6. Obtain permits for specific activities
Certain business activities may require specific permits. For example, if you plan to sell alcohol or tobacco products, you will need to obtain a permit from your state government. Other activities that may require permits include building construction or renovation, food service, and hazardous materials handling.
What You Can Do: Research the specific permits required for your business activities and obtain them as needed.
7. Comply with zoning laws
Zoning laws dictate how land in a specific area can be used. If your business does not comply with local zoning laws, you may face fines or legal action. Check with your city or county government to ensure your business is zoned properly.
What You Can Do: Research zoning laws in your area and ensure your business is compliant.
Opening a Business Checking Account – is this needed before you get permits/licenses?
Normally, a business checking account should be opened before your licenses and permits.
This is because you will need to pay for licenses/permits (and perhaps other expenses early on) and you don’t want to use your personal funds for these things because keeping your personal and business finances separate is important.
You should always strive to keep your personal and your business finances separate – for a variety of reasons (mostly tax purposes and liability purposes). Having the business banking account established first allows you to do this easily.
In some cases, a bank might require your to get a business license and permit before you can open a business checking account. However, most banks will allow you to open a business checking account even if you don’t have a business license and permit yet.
You will also want to choose and form a business entity such as an LLC, etc.
Choosing and forming a business entity is an important step in starting a business. There are several options available, including sole proprietorship, partnership, LLC, and corporation. Each has its own advantages and disadvantages in terms of liability, taxes, and management structure. Research each option and choose the one that best fits your business needs. Try this page – there’s a lot of great info here on LLCs, S-Corps, Sole Proprietorships, and more that will give you a head start on how to choose the right business entity.
What You Can Do: Research the various types of business entities and choose the one that best suits your business needs. Form the entity according to state regulations.