Articles

Do I Need a Business License or Permit?

Business Licenses and Permits

Just about every business, from a small retail business to a large corporation operating in multiple states, has to keep up with business license, permit and registration requirements for public safety, tax, or similar reasons. Sometimes, even a home-based business needs a local home occupation permit or even a business with employees working from home.

State and local governments (like counties, cities or towns) usually impose these business burdens, but sometimes the federal government does too.

CT Note: In today’s highly regulated environment, keeping up with your business licensing helps maintain good public relations and your good reputation.

How Much Does a Small Business License Cost?

The cost of a small business license varies depending on the type of business activity you are engaged in and where your business is located.

Business license, permit, and registration requirements change by location and by type of business. Businesses subject to sales and use tax have to comply with any registration, license, or permit requirements. Other common business licensing requirements include:

  •        Basic business license
  •        Tax ID number (a/k/a EIN or FEIN and State Tax Numbers)
  •        Home occupation permit
  •        Zoning permits or land use permits
  •        Health department permit
  •        Building permit
  •        Alarm permit
  •        Fire and police department permit
     

Consequences for Doing Businesses Without a Business License

Usually, a business that fails to comply with its licensing obligations has to pay a fine or penalty. In some cases, however, authorities could shut down your business operations – costing both money and goodwill. In recent years, many local governments have felt financial pressures and have imposed new or higher licensing fees. Some have also increased enforcement against businesses that haven’t been complying.

What Type of Business Licenses, Permits and Registrations Do I Need?

Given the large number of local, state, and federal agencies, a business could need any variety of specific licenses. And, these requirements can change over time.

CT Note: Many business licenses have to be renewed periodically.

Because there are so many different types of regulated business activities, a change in operational activities or the addition of a new product or service may require a new license.

CT Note: Opening a new location may also require a new license, permit or registration.

Am I Staying in Compliance?

Over time, to stay in compliance, it helps to remember that requirements are not the only thing that changes—your business changes, too. 

CT Note: Have you moved to a new location? Have you moved your headquarters? These kinds of changes could mean updating any registration, license, employer obligation filings, or permit requirements. 

A company with structural changes could also require changes to be made in order to stay in compliance. 

CT Note:  Another thing to consider is the responsible parties on your registration, license, employer obligation filings, or permit requirements. Anytime you have an officer change, you would likely be required to inform the appropriate jurisdictions as well.

Some Products, Services, and Industries Require More Licenses

If your business involves the sale of certain types of products (like lottery tickets, liquor, firearms or gasoline) or certain types of services (like medical care, auto repair, real estate or insurance), you might need a special permit or occupational license.

Some industries, like day care or aviation, are more highly regulated than others. These kinds of industries include:

  •        Agriculture (pesticides  and fertilizers)
  •        Animal-related
  •        Cosmetics
  •        Debt Management and Collection
  •        Education
  •        Financial services
  •        Firearms and Explosives
  •        Gaming
  •        Hazardous materials
  •        Healthcare and Social Services
  •        Mining and Oil/Gas
  •        Vitamins


Regardless of what your business does, it’s good to keep up with your business licensing requirements. It avoids unnecessary fines, helps maintain your good reputation, and helps keep the wheels turning.

Originally published: October 2016

Updated to March 2017

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