What is a Business License and why do I need one?

When you’re first starting a business, lots of things can seem unclear or confusing. Picking an entity, getting employee contracts figured out, and researching which sorts of licenses and permits pertain to your business personally can all prove to be daunting tasks. Luckily, there are plenty of online resources available to entrepreneurs to help guide them through the thick of it all. The Small Business Administration being one of the many helpful sites out there.

But today, we will make one of the hazier parts of starting a business clear: business licenses!

Firstly, what is a business license?

A business license is any government issued permit or registration that a business owner is required to obtain at the federal, state, or local level in order to legally conduct business. Basically, you need these licenses in order to officially open up shop. So it’s important to get this all squared away as a business owner before you want to start inviting customers into your store front!

Does my business definitely need a business license?

Almost every single local government requires every business inside the city or county to apply for at least the basic business license and pay the basic business license fee. So, in short, yes, your business definitely needs a business license. This license acts as a minimum tax levied against the business in a concentrated area. Do to this, some areas call the license a tax registration certificate instead of a business license altogether.

Now how do I get one for my business?

Any city website is a good place to start to look for how you can get your hands on the necessary business licenses your new company needs. If you’re in the neighborhood, stop by your local city building. They’re sure to have all the business licenses and permits your business could ever need. If you live in a smaller town, however, you may have to go on up to the county level to see if you can find the info you need on the county website, that is, if the small town you live in doesn’t have a licensing bureau. If after that you still can’t find anything, check out the state government. Most of the states have licensing guidance applications, and if they don’t have that, they will have a guideline with licensing requirements for you to easily follow.

Once you’ve filed the initial licenses, do you ever have to renew your licensing and permits?

Yes you do! Once you apply for and receive your license or permit, you will eventually need to renew it. Rules vary, but most likely, your city, county and state are going to need you to pay an annual fee along with renewing your licenses. Since it’s just a renewal, the fee isn’t too large, but don’t forget to renew because if you fail to do so and continue to conduct business, you could have to fork over hundreds if not thousands of dollars! So stay on top of your renewal fees!