The last thing you want to find out after starting your business is that you failed to comply with the law by not applying for the proper permits for your business. Before starting a small business, you should pay attention to the regulations of your town, city and county. In most locations, every business needs a basic license 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 multiple 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 sales tax license from the state of California and a federal tax identification number from the US federal government.
Not sure what kind of license or permit you need for your business? Well, as always, we made it simple for you. Here is a quick checklist that covers the most common federal, state, and local licenses and permits that you may need to obtain before starting the business:
Business License – This is the basic license you will need to legally operate a business. If the business is located within city limits, a city license is required; If it is abroad, it is purchased from the province. Contact the business licensing department in your city to apply. Also, remember that you need 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 you work, you may also need to obtain a similar tax identification number from your state.
Zoning and Land Use Permits Before you start your business, you need to find out if the space you will be using is properly zoned for the type of use that is planned. You may need a zoning compliance permit. Zoning ordinances regulate off-street parking, waste disposal, and the size, construction, and placement of signs.
Health Department Permits – If your business involves preparing and/or selling food, you will need a permit from the county health department. Note that the health department will inspect your facilities before issuing them.
Sales Tax License – This license is necessary before you can sell almost any product or service in any state.
Fire Department Permits – Businesses such as restaurants, day care centers, or any other activity that attracts a large crowd needs a permit from the Fire Department.
Special State Business Licenses or Permits – You may need special licenses if your business involves selling certain types of products including liquor, lottery tickets, gasoline, and firearms.
State-issued Occupational/Special Occupational Licenses – In many states, people in certain occupations are required to have professional licenses or permits. State licensing is usually required for auto mechanics, plumbers, electricians, building contractors, collection agents, insurance agents, real estate brokers, real estate distributors, and personal service providers (beauticians, cosmetologists, therapists, and masseuses). If you are considering starting any of these businesses, you will have to pass state exams to obtain the permit. Contact state government offices for a complete list of occupations that require licensing.
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, or tobacco, alcohol, or firearms manufacturing.
Licensing and permit 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 of your new business.