Opening a business can be a thrilling experience. Many entrepreneurs have a great vision of what they want their company to look like but aren’t sure of the steps required by law to get their business off the ground. In addition to choosing a name and finding the right location, there are several legal steps that must be taken before opening day. Obtaining the necessary licenses and permits is an imperative first step and often requires some time and research, so be sure to get started on the application process early on to avoid delays. Licenses may be required and regulated by federal, state and local agencies, and knowing which permits you need is a matter of checking with all three entities. States have several common requirements that must be met and permits that must be obtained before your business can legally open its doors.
Tax and Business Licenses
While it is almost certain that you will be required by your local government to obtain a business license, it does not necessarily exempt you from needing state authorization as well. You must register your business with the state government so that they can track sales tax and other employment records. If you will be selling products and your state charges sales tax, you will also be required to apply for a sales-tax license, which may be referred to as a “certificate of authority” or a “seller’s permit.”
Traditionally, there is an agency dedicated to distributing licenses and collecting sales tax, and application should be made through this organization. If your business is service-based but also involves the sale of parts, be sure to inquire whether the labor portion of your invoices is taxable or only the materials. Even home businesses and consulting companies must apply for a license in many areas, and knowing the regulations prior to opening day is essential for a smooth startup. Many regions consider it a criminal offense to commence sales without the proper licenses, and most have laws regarding the display of applicable permits.
There are many specific occupations that require their own permits or licensing. Your state licensing authority will have detailed information regarding which professions must obtain additional permits prior to employment. Physicians, dentists and other healthcare workers are often required to pass exams and provide proof of this testing in order to obtain a permit. Other occupations that require such sanctions include the following:
- Barbers, cosmetologists and beauticians
- Real estate brokers
- Insurance agents
- Funeral directors
- Private Investigators
- Bill collectors
- Security guards
The list of occupations varies by state, so be sure to check with your government agency regarding professional licensing requirements prior to opening up shop.
There are several products and merchandise categories that are regulated at the state level. Firearms, while also under federal regulations, fall under state jurisdiction and require a permit to sell. Similarly, a state license is required to sell liquor and gasoline. While the sale of food is not technically regulated at the state level, you must obtain a permit from the county health department and pass an inspection if your business plans to serve food or drinks.
Before your license is issued, you may be required to show proof of unemployment insurance. If your company will have employees, this is most likely the case, and such products can be obtained for varying rates in the private insurance market. Find out more by contacting your state’s Department of Labor.
Obtaining the necessary licenses and permits is an integral part to setting up your new business, no matter the industry or size of your company. Check with local and state agencies regarding any questions you may have prior to applying, and be sure to allow enough processing time before opening day to avoid stress and delays.
The content on our website is only meant to provide general information and is not legal advice. We make our best efforts to make sure the information is accurate, but we cannot guarantee it. Do not rely on the content as legal advice. For assistance with legal problems or for a legal inquiry please contact you attorney.