Business Licensing Requirements For A Company Working Nationally
Dan Levenson July 28, 2015
Whether you operate a single-person LLC, have a small business with just a few employees, sell goods and services, or receive business contracts in other states, many states require you to have a variety of business licenses and permits before you can legally begin operations. In addition, you will have to register your business with federal, state, and local taxing authorities. In the United States, there are an estimated 40,000 licensing authorities. The business licensing requirements and permits vary by jurisdiction and by industry.
Purpose Of Licenses And Permits
Starting a new enterprise or managing an ongoing concern involves so many activities that you must carry out, from registering a fictitious business name to registering for business taxes. All levels of the federal, state, county, and municipal government have some kind of business license, permit, and tax regulations. Licenses and permits have three primary purposes:
- Identify businesses and ensure that business owners can be held accountable for their actions.
- Protect the public health and safety.
- Maintain track of business revenues and profits for taxing regulations.
With so many departments and agencies involved in the administration of businesses across nearly every sector, the licensing and permitting requirements can become a bit daunting. You must perform a meticulous investigation the licensing and permit requirements that affect your industry. Do not ignore these important regulatory details. Being out of licensing and permit compliance puts your business in jeopardy, and hit you with costly penalties and interest. Noncompliance may even temporarily shut down your operations.
Types Of Business Licensing Requirements
Based on an array of factors, including the nature of your business, number of employees, and business locations, you will need several licenses and permits in order to conduct business in your location or territory. The following list is not comprehensive, but includes some of the most common kinds business licensing requirements:
- Federal Licenses
Most business will not have to worry about federal licensing. The exception may be investment advisory services and radio and television stations.
- State Licenses
Many states have licensing requirement based on certain occupations, including (but not limited to) doctors, nurses, consultant, insurance agents, real estate brokers, plumbers, electricians, building contractors, barbers, and cosmetologists. Contact your state government offices to get a complete list of occupations that require licensing.
- Business Licenses
If you operate within an incorporated city check with the authorities because you will likely need a license. If you are outside the city’s boundaries, you will probably need to comply with county requirements.
- Tax Permits
You will need to comply with IRS, state and local governmental agencies for applicable tax permits. This process starts with registering your business to receive a federal tax identification number.
- Certificate Of Occupancy
If you plan to occupy space to work, you will likely need to apply for a Certificate of Occupancy from a city or county zoning department.
- Health Department Permit
This is primarily necessary for businesses that handle medical care, food prep, child care, or other businesses where the body is exposed to outside elements.
- Building Permits
If you plan to renovate your workspace or build a new building in order to operate a business, you will likely need a building permit from the local municipality or county.
Other types of permits include sign permits that control the appearance and/or location of business signs and fire department permits, which govern the public safety of business locations.
Make sure that you understand the different licenses and permits required for the jurisdictions where you intend to operate. Do not assume that certain licenses and permits do not apply to your business, For example, IT services companies or IT consultants operating in the State of Washington may be required to obtain taxing permits if they offer certain IT services.
Starting The Licensing And Permitting Process
Make sure that you complete the necessary due diligence so that you have the proper local license and permits in the state where you intend to do business. You can began your search online, but always verify the information you receive. The Secretary of State Office is usually a good place to start your search. Then, work your way to the county and municipal levels of government. Many business owners find researching the various departments to be a bit overwhelming and hire third- party services to simplify this the task of business licensing requirements.
Even if you are an experienced person operating a business in your chosen profession or industry, you will find it challenging to keep up with all of the licensing and permitting responsibilities. If you plan to open a new business or expand nationally, you must ensure that you identify the licenses and permits that you need to operate your enterprise legally.