There are many details to consider when starting a new business. Among the most important preparatory steps is obtaining the necessary licenses required by federal, state and local laws. While these certificates are usually not complicated or expensive to obtain, there can be multiple permits required, and you will likely need to contact several different agencies in order to secure all the necessary permissions. States and localities impose the largest number of conditions upon businesses, and knowing which government entities to contact is imperative to ensure compliance with the laws.
States have varying laws and requirements regarding licensing, though many have adopted similar permits and agency structures. Most states require one or more of the following permits:
- Professional license: Certain occupations require professional testing and licensing in order to do business. Health care workers such as nurses and physicians must pass state exams to become certified and then maintain their license by taking continuing education courses. Lawyers, accountants and real estate brokers are under similar obligations to obtain and maintain a professional license. Other professions such as barbers, mechanics, cosmetologists, security guards, funeral directors, bill collectors and private investigators must secure specific state licensing before serving clients.
- State business license: Nearly every company that is open for business will need one of these. Some states even require home-based businesses and freelance contractors to obtain a permit, so be sure to check your state’s regulations before you assume your company is exempt. Traditionally, you obtain this license from a state agency specifically tasked with dispersing licenses and tracking businesses for tax purposes.
- Sales tax license: A sales tax license is required for nearly every business that sells services or products and can be obtained by contacting the state sales tax administration.
- Product license: In order to sell gasoline, firearms, lottery tickets or liquor, you must first obtain the applicable permit from the state.
- Name permit: If your company will be conducting business under another name, you may be required to obtain a fictitious name permit, or a DBA license, to be in compliance with the law.
Your municipality likely requires several of its own licenses and permits to legally open a business. Some are similar to state certificates, while others are more specific to your location or industry. The following are typically required at a local level:
- Health department permit: For establishments planning to serve food or beverages, an inspection and permit is required prior to opening day.
- Zoning permit: Zoning regulations can be broad or very specific, and some may even exclude certain types of businesses from opening up in specific areas. It is always a good idea to check zoning laws prior to signing a lease agreement or finalizing business plans. Manufacturing entities and home-based businesses are often regulated by zoning laws and should take care to research the guidelines for their location. Changing zoning laws is sometimes possible but not always practical, so early-awareness of the rules is imperative for a smooth start up process.
- Fire department permit: In some cases, a special certification from the fire department is required prior to opening. This is usually the case for businesses that draw in large numbers of clients at the same time, such as bars.
- Building permit: Many retail and office spaces require some remodeling in order to prepare them for your new company. A building permit is required for these projects and is issued through the city the property is located in.
- Environmental permit: Depending on the industry your new company is a part of, you may be required to obtain an environmental permit before beginning operations. The agencies responsible for issuing these certificates will look into the potential impact your commerce may have on the surrounding air, water and land.
A little advanced research into state and local laws will reveal which permits you need to acquire before opening your new business.
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