Startups: What Business Permits and Licenses Do You Need?

Business permits and licenses represent another set of legal regulatory requirements. These must be obtained before you are able to officially open your doors and operate your business legally. State and local permits and licenses apply equally to proprietorships, partnerships, and corporations. In some instances federal permit requirements may also apply.

The most common license is the general business license. It’s for the privilege of operating in your jurisdiction. There are also special licenses that may apply, depending on the type of business you plan to start.

Here are some questions to ask yourself to help identify these requirements:

1. Where Am I Conducting My Business? Zoning ordinances are designed to protect land use and the character of neighborhoods. They are regulated on the local, municipal level. When deciding on the physical location for your business, you’ll want to make sure that your intended business use is allowed by the local ordinance. The same holds true for any rented commercial space you plan to lease.

   Even if you contemplate working from home and your startup relies exclusively on Internet traffic, not foot traffic, you’ll still want to check with your local zoning or planning office. Many will require a permit. Some, for example, call it a Home Occupation Permit, and you’ll need to secure it before you can obtain a general business license. It’s not a complex form. Its purpose is to help the local authorities evaluate how your new venture will impact the neighborhood. Will it increase foot traffic? Car or truck traffic? How about parking problems or noise problems?

2. How Am I Conducting My Business? If, for example, you’re contemplating starting a manufacturing company, you may need to investigate federal and state discharge permit requirements if your enterprise discharges anything into the air, water, or ground. There may also be permit requirements for the proper disposal of hazardous waste.
3. Who Is Conducting My Business? Some businesses, by their very nature, require licensed professionals such as plumbers, electricians, beauticians, lawyers, accountants, and general building contractors. If an employee doesn’t have the right credentials, the employer can be held responsible.
4. What Is the Nature of My Business? Some businesses require special licenses to operate. If, for example, you’re planning to open a restaurant with a bar, you’ll need a liquor license. Your state and local government can help you identify what special licenses may apply to your business.

The foregoing is not an exhaustive list of business licenses or permits. It’s only a sampling to help you identify a big potential startup trap. Operating without a required license or permit can expose your business to fines and penalties. In some cases, those fines can be levied for each day you remain out of compliance. It adds up fast.

To find out what business licenses and permits apply to your specific business venture, contact the Secretary of State office of your state and your local municipality for information and advice. Tell them what you plan to do and they will gladly point you in the right direction, provide you with lots of useful contact information and checklists. You might also want to ask what permits or licenses need to be obtained first and what applications can be submitted simultaneously. It will save you time.

Unfortunately, there is no one-stop license and permit office because the requirements relevant to your specific business will probably rest with more than one office. As a result, securing all the necessary paperwork can be a tedious process. It will require multiple follow-up calls. Expect delays. If you don’t have time for an administrative paper chase, or prefer the peace of mind of having a professional do it, you can always hire a lawyer with experience in these matters. Certain licensing services may also be available through business services such as LegalZoom.com, Incorporate.com, and Bizfilings.com.