Types of business licenses and permits

Types of business licenses and permits

The last thing you want to find out after starting your business is that you’ve broken the law by not filing for the correct permits for your business. Before starting a small business, you should pay attention to the regulations of your city, town and county. In most locations, every business needs a basic license, sometimes called a certificate of tax registration. In addition, other permits and licenses may 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 run, you may need to apply for licenses at several 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 venture? Well, as usual, we’ve made it easy for you. Below is a quick checklist covering the most common federal, state and local licenses and permits you may need to acquire before starting a business:

Business License – This is the basic license you will need to legally run a business. If the business is located within city limits, a license must be obtained from the city; if outside, procured by the county. Contact your city’s business licensing department to apply. Also remember that you have to pay an annual fee.

Federal Employer Identification Number (EIN) – Also known as a Tax Identification Number, this is required for almost all types of business. Depending on where your business is located, you may also need to obtain a similar tax identification number from your state.

Zoning and Land Use Permits – Before starting your business, you need to find out if the space you will be using is properly zoned for the intended use. You may need a zoning compliance permit. Zoning laws regulate off-street parking, littering and the size, construction and placement of signs.

Health Department Permits – If your business involves preparing and/or selling food, you will need a county health department permit. Note that the health department will inspect your facilities before issuing you one.

Sales Tax License – This license is essential before you can sell almost any product or service in any state.

Fire Department Permits – Businesses such as restaurants, day care centers, or others that draw large crowds need a fire department permit.

Special state-issued business licenses or permits – you may need special licenses if your business involves the sale of certain types of products, including alcohol, lottery tickets, gasoline, and firearms.

State-Issued Special Occupational/Occupational Licenses – In many states, people in certain occupations are required to have licenses or permits to work. State licensing is usually required for auto mechanics, plumbers, electricians, construction contractors, collection agents, insurance agents, real estate agents, property owners, and personal service providers (beauticians, cosmetologists, therapists, and massage therapists). If you intend to start any of these businesses, you will need to pass state exams to obtain a permit. Contact your state government offices for a complete list of occupations that require licensing.

Special Federal Business Licenses or Permits – You may also request special business licenses from the federal government if your business includes investment consulting, drug manufacturing, meat processing, broadcasting, tobacco, alcohol, or firearms manufacturing.

Licensing and permitting 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 for your new business.

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