As an entrepreneur, you’re probably excited about what you do. Your knowledge, passion, drive and understanding of your business propels you forward. Like a lot of business owners, you didn’t get into your work because you like paperwork and legalities, but unfortunately you can’t ignore them.
Not to worry. Getting your business duly licensed and legalized doesn’t have to be long and painful. In fact, getting your business properly established up front can reduce hassle down the road and minimize your liability.
Decide from the start what kind of entity your business will be. This decision doesn’t have to be overwhelming or involved.
Many small business owners are proprietors – with no need to file any papers to become a legal business. Proprietors bear full liability for their business’ actions, but get to keep full profits. Because there’s no legal separation between an owner and her business, she only needs any necessary business licenses or permits to get started. Partnerships usually involve partnership agreements to establish rules among the owners, but also don’t require any legal paperwork to come into existence.
Entrepreneurs seeking to limit their liability can decide to form corporations, limited liability companies, limited partnerships and limited liability partnerships. These require filing paperwork with your state’s secretary of state. See (link to article on business forms)
Most cities and counties require businesses of all types to have business licenses. Some want little more than an application and fees. Others look carefully at what a business does and where it’s located before approving a license. This allows them to enforce zoning ordinances and screen out businesses that are hazardous or don’t meet their community standards. Fees may vary based on business type. In some places, a business may need both a county and city business license.
Industry Specific Permits
Many businesses are regulated by county, state and federal governments. Accordingly, new businesses must acquire special permits to operate. Some companies need multiple permits to offer their full array of products or services.
For example, a gas station usually needs a state permit to sell gasoline. However, if it wants to sell cigarettes, alcohol and propane, these require other state permits. Adding a car wash may require a county wastewater permit. And running a convenience store that sells both groceries and hot food may involve another two county licenses.
Other businesses that commonly require special permits include restaurants, barber shops, banks, liquor stores, grocery stores, dry cleaners, transportation businesses and professional firms.
Federal permits are needed for stock brokerages, financial institutions, lending agencies, interstate transportation and import-export businesses.
Operating a business without a license can result in civil and criminal liabilities. In many cases, even home businesses need licenses and permits. Entrepreneurs who are anxious to get their businesses going and decide to return to legalities later can face steep costs if they are ever discovered – which can easily happen if a dispute or legal problem arises. For example, a person in California who sells alcohol without a license can face a $1,000 fine and 24 hours in jail.
Getting What You Need
Your city, town or county can inform you about its local business licensing process and may have information and forms available online. However, discovering the full array of permits and licenses you may need can be challenging.
You can always consult visit your county and state websites to search their list of regulated professions. Attorneys can also advise you.
However, those who want to ensure they meet all licensing and permit requirements at all levels of government without the heavy fees of an attorney can take advantage of License123 – a one stop online shop for all your business license needs.