In running a successful business, some certain legal documents have to be acquired to have the backing of both the state and federal government as the case may be. A business license is one of those documents that are essential for the growth of every business

To successfully operate a business, you must possess a business license regardless of the platform you transact on, whether online or offline. So as a business owner, you are required to fill for a business license as this would be a means for the government to keep track of business operations in an area and also keep track on tax revenues.

As a business owner without an operating license, your business is under the risk of heavy fines. In some cases, the city where your business is located may require you to halt every business operation until you complete the paperwork required of you. Note that business licenses must be renewed annually, and there are no significant differences between online and offline business licenses.

Business License – An Overview

A business license allows business owners to peacefully run their business operations within a certain location. This license proves that you have the approval of the government to operate in the city, state or country it was issued.

A business license and permit are a good way for the government to keep a tab on what is going on with businesses within a city. In some areas, some businesses do not require to possess a business license until they attain a certain revenue benchmark. 

While in other cities, business owners are required to obtain a business license before they commence any business activities. To know your local city standing on this, you can visit the SBA website to learn more. 

In some jurisdiction, business licenses have to do with registering your business for taxation. It also helps the government to oversee zoning, public safety and social impact of businesses to their cities and countries. Business licenses also come in handy when you are getting a resale number if your business wants to buy wholesale goods and you’re trying to avoid sales tax.

There are some perks attached to having a business license regardless if your business requires a business license or not. With a business license, your business has rights to tax deductions, this is according to the Small Business Association. The license also proves your business is legitimate and has the backing of the government which can come in handy when you want to access financing and partnerships.

Requirement Needed to Obtain a Business License

The documents that would be required of you when you want to process a business license depends on the state your business is situated. Below are some of the general requirement needed to obtain a business license:

  • Legal Structure

You must produce a legal document showing that your business entity is either a sole proprietor or a limited liability corporation.

  • A business plan

A detailed description of your business operations must be provided to aid the licensing process.

  • Sales Tax License

This can be obtained from your state agency.

  • Inspection and other permits

If you require a federal license or permit, it is advisable to get it before applying for anything state-level.

Home Business Zoning – What it Entails

Home business zoning is a review that is carried on the location of any business requesting a business license. Before issuing a business license, the state/city agency may carry out a zoning review of your business location or require a zoning permit. In a case where you operate an online business, you must guarantee the agency that you can operate a business out of your home. Generally, most online store owners do not encounter major issues when it comes to zoning because most areas have flexible zoning laws for home businesses. But some things should be duly noted, some of which include:

  • Signage like any physical changes to the home appearance
  • Visitors – the number of employees and people going in and out of the premises
  • Noise pollution – is your business operations causing nuisances like noise or odour?

All business owners must get the relevant licenses needed to successfully run their business before they commence operations. Getting all relevant licenses will ensure that you are operating legally from the beginning. Hence, it will save you money and paying heavy fines.

Which License Does Your Business Require?

If you operate any kind of business whether online or offline, you would require at least one kind of business license. The kind you should apply for depends on the industry your business fall under, the size of the business, location, among many others. 

The next part of this article will explain some business licenses every business and owner should have at least one of these licenses.

There are several types of business license available depending on what and where it wants to be used. Below are some of the major business licenses:

  • General – State-issued License

Regardless of your business type, you must get a local city or country business license. This license is the general one that involves the business operations within the local jurisdiction. If your business entity is located in a city/country where there is no business licensing department, you can get information on how to obtain a general license from your tax office.

Most times, this license is designed as a business tax certificate, reseller’s certificate or license. It is advisable to check your local zoning ordinance to see if your business compliance with the zoning law. If your business does not meet the local zoning ordinance or neighbourhood requirements, you can get an exemption or variance to aid your business. 

Ensure to follow the right procedure when filing for this. Alongside Sales Tax License, the above-mentioned licenses are the most crucial when it comes to running your business and getting a license.

  • Federal business licenses

Every business must follow the federal regulations guiding businesses, some of these regulations require every business entity to obtain licenses and permits. Alongside the local and state business requirement, some federal agencies also require business owners to have certain licenses. If your business is regulated by a federal body, you must apply for a federal license from the issuing body.

  • Doing Business as Name (DBA)

This is one of the easiest business licenses to obtain if you are doing business as a name. This license is required if you are operating a business that is not under your name. This is a state requirement, and unless you are trading under your name without any amendments, you must obtain a DBA. Regardless of your business size, it is advisable to obtain this license as it prevents other people from using your business name, and it protects your business from fraud.

How To Obtain A Business License

Your license is very easy to get if your business is not home-based. If you operate both an online or offline business it might be a bit difficult to get your business license. You will need to contact your city planning and zoning department; they are in the right position to execute a zoning review to find out if your business is violating any law.

Regardless of how simple or complex your business is, you must equip yourself with enough information or have a person guide you through the process. After knowing the ropes, you can then proceed to check your city listing so you’ll know the kind of licenses your business need and their requirements.

The application form can be downloaded or picked up in person from their office. Ensure to know the business structure of your business, detailed operations, sales tax license, etc. before filling the forms.

You can then proceed to fill the forms and file them with your local finance department or the issuing department. Note that filing the forms is not free.

The Cost of a Business License

The cost of obtaining a business license differs per city/country, and also the industry where your business falls under. Generally, it cost of obtaining a business license is around $50 – $400 and above. Note that there might be an additional fee of $25 for fingerprinting, processing, etc. 

Getting a DBA license varies per state and country. On average, DBA cost an average of $10 – $50, while in some state/country, it cost $20 – $25. Note that most DBA expires after three-five years of obtainment.

Generally, most business licenses are to be renewed yearly; they expire at the end of a fiscal year. Business license renewal is not as stressful as the first application. Renewal can be done in person, over the phone or by mail.

The cost of renewing a business license by some institutions is almost the same amount as getting a new one, although some institutions request for a lower fee. Remember to renew as soon as possible, else, a part of your revenue will be used to settle the fine.