What Are the Different Types of Business Licenses?
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Most regions/states require you to have some form of business license. Depending on the exact location of your company, your industry, and local regulations, the type of business license that is required will vary. Each state has its own rules and regulations as to licensing. There are also some industries where a federal license will be required as well. When it comes to procuring the necessary licenses, you will need to do a bit of research as far as what your particular company will need to have to commence operations. You can look online for this information; you can also check with your local governing body to find out even more about what is entailed with getting the licenses you require. In this article, we review eight of the more common types of business licenses that companies generally need to have in hand before officially launching.
General Business Licenses
Many cities across the US will require companies to obtain a general business license if they intend to have a physical location—in some regions, this location could also be considered a home. The cost of this license will of course vary by region. They can range from one hundred to several hundred. The industry can play a role also in the overall cost associated. As far as how long it will take to get a general business license, it depends on a variety of factors. Again, some may be just a couple of weeks while others could take up to a couple of months. So you want to plan. Check with the city in which your firm is located to find out specifics regarding what exactly is required.
There are certain types of businesses that will need to go above and beyond a general business license and apply also for special licenses applicable to their business type. This usually will apply to certain sensitive businesses that have special standards to which they have to adhere to legally conduct business. Such industries for example as daycare and construction trades could potentially fall under this category depending on where they are located. As with general business licenses, the cost and timeframe on these will also differ from locale to locale. Generally speaking, however, they can take a bit longer overall to actually get approved for.
If you operate under a name other than your own, you will need to apply for a DBA or doing business as a license. This is most common with sole proprietors who set up a company and then choose a name different from just their name. While you do not have to have a DBA if you are going by something other than the legal name you need to go ahead and get one. This can be done most often by going to your local county/town office and filling out a DBA form. Fees for this are generally minimal, on average 25-50.00. You are also able to get an EIN using your DBA.
Direct Selling Licenses
Some direct sale companies may need to apply for a business license. A direct selling company is one that transacts business directly with the client versus at an official place of business. Door to door sales could fall under this category as well. Not all direct selling organizations will require a form of business license; that is why it is critical to check with your regional government office to see what you need to launch your direct selling company.
Cities, counties, and various municipalities will usually have their own business licensing requirements. Especially if you have a physical, fixed location within city limits, very often you are going to have to apply for certain types of licenses, to include building based licenses. For these, you would check with your local building and zoning office. They can get you the info and applications necessary to ensure that your business complies.
Certain occupations will require professional licenses to practice. Medical practices almost always will require a professional license, as well as accountants, legal firms, and real estate professionals. If you are unsure if your practice requires a professional license, you could consult with an attorney to this end. Keep in mind also, that any person you hire on and bring into your practice will also have to be able to show proof of their professional licensing.
Federal Business License
Certain businesses, beyond local and state business licenses, are also going to have to obtain federal licensing to operate. While your region does factor into it to some degree, there is a set standard of requirements depending on industry type. Also, if you operate across state lines, in some instances, you will need to get federally licensed. Among the most notable industries that will need to be licensed at the federal level are tobacco, firearms, alcohol, and aviation, among others.
Sales Tax License
If your business charges sales tax on goods and services, then you will likely require a sales tax license. For this, you will need to check with the state governing body to determine whether or not you do need a sales tax license of any kind.
This list is certainly not exhaustive; numerous types of business licenses fall under subheadings of the above categories. You need to research thoroughly to ensure you are meeting all requirements, otherwise, your business could be fined and penalized. In some cases, it could potentially be shut down. So keep on top of where your current licensing requirements stand.
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