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Do I need a business license? Here's how to know

America loves small businesses. As a company, we love startups and entrepreneurs. And the United States has one of the most business-friendly governments in the world, with less bureaucracy and more flexibility than most industrialized countries.

But that does not mean that small businesses are free from regulation. Just as you need a license to drive a car, you can probably get a license to operate your business legally. And – to make things confusing – you may need multiple licenses from different federal, state, and local governments.

Who needs a license?

Anyone looking to open a business must follow good legal channels in order to operate a business legitimately. This is true that you are part of a limited liability company or even a sole proprietorship. Even a company running out of one's garage still requires some form of license. While this may sound too intrusive, it is actually a safety measure designed to protect all those involved in the adventure, whether directly as customers or owners, or more indirectly as a community, county, state, and nation that supports its legitimate conduct in many ways.

What types of license?

To start your business, you must determine the required licenses. This is a variable that depends on several factors to operate in full compliance with the law, but the two largest are the type of industry and the location of the company .

What kind of business is being opened? If you want to open a mini-market, do you also want to sell alcohol? If so, you will need an alcohol permit, at least. If the company is dealing with flammable materials available to the public, a fire service permit may be required.

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It is to establish what the company will sell or work on a daily basis and to determine what legal documents are required for the licensed operation.

Where is the location?

The next important factor is location. Different states, counties and cities may have different regulations with requirements that vary depending on a number or factors. For example, Starbucks in Hawaii does not require that its employees have a food handler license, which means that the state of Hawaii does not need it. However, in California, it is absolutely necessary for employees to have one to prepare and serve food. Different states, different laws. It is of utmost importance to look into all aspects of a business to ensure that it is applied in a manner that complies with all codes.

While state laws for businesses will tend to be the most important, and the most heavily penalized to neglect, a business owner needs to check all other jurisdictions: city, county and federal. Licenses and permits may vary depending on whether one operates within the city limits or not. Your county may ask you at least to register your business name. You will have to contend with federal laws if you want to sell alcohol or firearms. There are a variety of other federally regulated products and services.

Once you've discovered which jurisdictions have a say in your business, where are you going to get the licenses? All levels of government can issue licenses, whether federal, state or local. And generally, everyone has a website. Most often you can go online and download the necessary forms. Another option is to go to the local city hall and pick them up.

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A new business must register with the state and receive an employer identification number from the IRS, which works much like a social security number. for the people.

Why do I need a license?

It is necessary to come to terms with the "why" behind the commercial license. This is perhaps the most important part of any equation. America is fortunate to operate under a government that grants many freedoms to its business owners; However, regulation is always important to keep everything safe and sound.

Licenses allow governments to impose protocols that are put in place to protect both the consumer and the provider. The legal protection of the business is ensured if a lawsuit is to be brought against an institution that operates in full compliance with the law. And legal protection is provided for the consumer who can sue an establishment operating outside the law.

Everyone has to pay their dues and that includes businesses. Operating licenses are a way for the government to regulate the taxation of all entities conducting activities. Whoever escapes taxation faces fines and may even be forced to close the business. This is why it is crucial to properly track all bureaucratic pathways and properly file all documents – this ensures that no lawsuit or forced closure can result from the absence of legal documents. .

So, what licenses do I need?

As stated above, there is no simple answer to this, as it depends on the type of business you operate and the municipality in which your business operates.

One option is to use a business license service to find out exactly which local, provincial, and federal licenses you need. These services charge a small fee for doing their research.

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If you have a company attorney, you can ask them to do the research for you and to apply for the required licenses.

If you prefer to do the research yourself, start with your town hall, who can tell you which local licenses you need. You will need to contact the office of your state's secretary of state to know the required state licenses. For federal licenses, the Small Business Administration Web site contains useful information.