State License Requirement
Business licensing requirements differ from state to state, but most state governments typically require the following types of licenses and permits:
- State business license: Essentially, a state business license tracks and monitors businesses for tax purposes and is required for businesses to operate lawfully in the state. Most states have agencies specifically created to issue state licenses.
- Tax registration: In states with a sales tax, you must submit an application for a sales tax license to charge customers.
- Occupational licenses: All states regulate certain professions and require practitioners of those occupations to obtain (and maintain) licenses in order to do business. States require licenses for doctors, lawyers, accountants, real estate agents, private security guards, funeral directors, private investigators, barbers, and many other professions. To confirm whether your state requires your business to have an occupational license, contact your state’s licensing authorities.
- Licenses for selling certain products: States require businesses to have licenses to sell products such as liquor, firearms, and gasoline.
- Unemployment insurance: For businesses with employees, most states require the company to participate in their system of unemployment insurance. Contact your state’s Department of Labor to find out more.
Local Requirements and Issues
- Register your business name: You’ll have to register your business name with local (and likely state) agencies such as the county clerk, along with the business address. You’ll need to pick a name that isn’t being used by another business. If the business is an LLC or corporation, the business name will be registered with the state when you submit the articles of incorporation. If you’re a sole proprietor, the default name will be your name, but you can apply to use a fictitious name (also known as a DBA—” doing business as”) with the city or county. Partnerships can also apply for a DBA with the city or county.
- Local business licenses: In addition to state or federal licenses, where applicable, almost all businesses will need permits from the local government (city or county) to operate lawfully within their jurisdictions. These local licenses are typically easy to obtain and require paying a fee.
- Zoning permit: A zoning permit demonstrates that the city or county approves the location of your business for your business’s use. Zoning laws are locally specific and can vary even from block to block. The laws regulate things like the type of business that is allowed in an area, waste disposal, the size and placement of signs, and even the appearance of the storefront (if, for example, you’re in a historic district). If your specific location isn’t zoned for your type of business and you’ve signed a lease, you have trouble on your hands. So, before signing a lease, be sure to confirm that the area is zoned for your usage and that the lease accurately reflects the type of business.
- Health permit: If you prepare food as part of your business, you’ll need a permit from the county.
- Building permits: If you want to remodel or build a new space, you must get building permits from local agencies to ensure safety and to confirm that the remodeling or new space conforms to local ordinances. Depending on the type of work that’s being done, you may also need permits for plumbing, electrical, and heat or A/C work. Be sure to consult with a licensed, experienced contractor to determine what types of permits you’ll need as well as how much it will cost to get your business up to local requirements.
- Environmental permits: In addition to state and federal agencies that cover environmental issues, local agencies also regulate businesses’ environmental impact, including issues such as air quality, water quality, and waste disposal. For example, the number of local air quality boards is increasing, as is their activism in maintaining or improving air quality in their areas, with a particular focus on businesses.
