Do I Need A Business License?

Many entrepreneurs and small business owners wonder whether or not they need a business license. A business license is a type of legal authorization to operate a business in a city, county, or state. A license may even be required on a federal level. Typically issued in document form, a business license gives a business owner the right to conduct entrepreneurial activities as set forth in the license application. In most cases, there is a fee charged to obtain a business license. In order to determine whether or not a license is necessary, you should first check with the state and/or county in which your business is located. It is highly likely that your business will require one if not multiple licenses or permits.

As a general rule, most business need one or more federal, state, county or local licenses or permits in order to operate. Licenses and permits can range from basic to extremely specific, depending on the location and type of the business. Imagine you want start a sidewalk and street vending service such as a food truck, in Los Angeles. A sample of the city wide required permits and licenses include a business license, zoning approval and a land use permit. County wide permits may include a fictitious name filing, (DBA) and a public heath operating license. State wide permits and licenses may include occupational safety and health information, sales and use information and workers compensation information.  Obtaining necessary licenses and permits is extremely important. Not complying with licensing and permitting regulations can lead to expensive fines and put your business at serious risk.

In addition, those interested in operating home-based businesses should check the zoning laws of the area in which they plan to operate. Zoning requirements may exist that limit or regulate the use of residential property for business operations. Certain business operations and activities may be restricted altogether. In some areas, a fire safety inspection may be required before a home-based business can obtain a business license.

In some instances, a business license may not be required. For example many small, home based businesses do not require a business license. Although this may be the case, there are several advantages to obtaining a business license. First, a licensed business is an entity entirely separate from its creator. Therefore, the business and its creator are taxed separately, thus shielding the creator against certain types of liability. In addition, filing separate tax returns provides the opportunity to deduct business expenses that could not normally be deducted on personal taxes. In addition, separating business and personal taxes makes it easier to report income and business losses. Finally, distinguishing yourself from the competition by establishing a professional identity helps increase credibility with your customers. Most businesses choose to incorporate to prove their legitimacy to both customers and suppliers. Adding “INC.” or “LLC” after your business name gives you the credibility and professionalism that many customers are looking for.

The variety and complexity surrounding the permit and license requirements for business leaves many scratching their head. Thankfully, MyCorporation can help! We can provide a packet that includes, an overview of the licenses, permits and tax regulations required for your business, licensing authority contact information, detailed information regarding how the fee of each application as well as the actual license, permit and tax registration applications and associated documents. Check us out HERE.