Licenses and Permits Needed to Start a New Business
UPDATED: July 5, 2018
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Most businesses have licensing or permit requirements. Whether or not you will need a business license or permit depends on the type of business you plan to open amd the location of your business. Licensing or permit requirements are determined by federal, state, county, and local rules. Some businesses need to have special licensing, while others only need a tax or operating license. Sometimes small, home-based businesses do not need to be licensed at all, but some industries such as health care providers and plumbing businesses need professional licensing.
Determining if You Need a Business License or Permit
The best first step to take in determining whether and what kind of business licensing you need is to determine the type of industry your business falls under. Next, check with your state or county websites to determine whether your business needs a license or permit to operate. The U.S. Small Business Administration website is useful for searching state licensing requirements.
Main Purpose of Business Licenses and Permits
One of the biggest reasons for requiring business licenses or permits is for taxation purposes. This type of licensing does not mean that the business owner has a particular level of expertise; it only helps the government monitor the amount of revenue taken in for taxation purposes. A seller's permit, for example, serves that purpose well. While business licensing is enforced for tax reasons, another reason for licensing is that the government has an interest in regulating businesses that may affect public safety, such as food service.
This is also the case if you plan to open a factory that could harm the environment. The general rule of thumb is that if you are starting a business to serve the public, and there is some possibility that harm could come to the public from your business, then you need to be licensed. These licenses may also reflect the level of expertise the business owner has in the industry; this includes doctors, dentists, hairdressers, estheticians, electricians, or plumbers.
Most likely your business will need some type of licensing and you should research licensing requirements thoroughly. Failure to obtain necessary licenses or permits can lead to fines and possibly lawsuits. If you need additional assistance in finding information on obtaining the appropriate permits or licenses, or require further help with opening your business, you should contact an experienced business attorney for assistance.