When you plan to start a business in the US, there are an array of tasks you need to fulfill, from initial planning to final setup. Depending on the type and location of your business, you may need to apply for single or multiple business licenses. Regardless of the country you live in, business administration regulations and agencies must require you to obtain some kind of license to execute your business activities in the US. The application approval time, processing fee, and overall paperwork you will need to obtain a license vary based on the state you choose.
In this article, we will learn what business licenses you need to get, the cost of acquiring a permit, the overall time the application takes, and how to get them in a timely manner. Let’s first understand what a business license is and why you need to get one.
What is a business license?
In general, a business license is a permit or a license that you need to operate a business or offer your services in the US. They are issued by state, federal, or county and municipal agencies. The purpose of business licensing is to register the establishment or entity with the state and federal government for taxation. Another major reason is to ensure that the business follows industry regulations. The type of business license you need to run a company depends on the state you operate in. Most states don’t require a business to acquire a license to start operating. In that case, you may also require a permit to start a business.
Do I need a business license?
Whether or not you need a business license depends on the state, federal, or local requirements and the type of business you run. Business licenses and formal permits are meant to keep customers safe as well as the processes transparent, so you must get one if required. To learn more about whether you need a business license or permit you may visit:
- Department of Revenue, Secretary of State office, or other government agencies.
- Resources suggested by local small business administration offices.
- Attorney or business lawyers and professional service providers for proper documentation to get the permit and license.
Do I need a business license to sell online?
The short answer to this question is – yes. Getting a license to sell products or services online shows credibility. Plus, it is required to operate a business legally. Selling online requires the vendor to obtain a business license, particularly if online is the only channel. However, if you are a brick-and-mortar store planning to sell your products online, you don’t need an additional license. Adding an online channel to your line of sales platforms will not require any further paperwork. Based on the products or services you deliver, here are some common licenses and permits you could apply for.
- General license
- Sales tax license
- Seller’s permit
- Home occupation permit
- Specialty license
- EIN (Employer Identification Number)
How much does a business license cost?
Business license fees vary across the states you run your business from and the industries you serve. Depending on the location of your business and the type of business you handle, you could pay a business license fee of anywhere between $50 and $200. Before you apply for a business license, determine whether you need to obtain one or not. Many businesses can run operations without an operating license, so figure out whether you need a license before you pay anything.
For several businesses, you might require a state license or federal license, or both. If a federal agency regulates your business activities, you will require a federal license. For example, if you are operating a business in any of the following lists, you will need a federal business permit.
- Alcoholic beverages
- Fish and wildlife
- Commercial fisheries
- Mining and drilling
- Nuclear energy
- Maritime transportation
- Transportation and logistics
- Firearms, ammunition, and explosives
- Radio and television broadcasting
How do I get a business license?
Getting a business license is easy and you can obtain it in four simple steps. Research regulations in your state, city, or county to check out the type of business license you need to execute business operations. If you are not sure what government regulations apply to your line of business, contact your area’s governing agency for guidance. Submit your business license application along with all the supporting documents. Make sure all the documents and paperwork are up-to-the-mark. You will also need to pay the filing and processing fee along with your application.
Depending on the state you choose, you will have to wait for several days to a couple of weeks to get your application approved. After your application gets approved, you will receive your business license and then you can start your business operations in your area. When your license expires, you will need to renew it as per your state-specific regulations. Make sure to check all the renewal guidelines to apply in time.
How long does it take to get a business license?
The time it takes to obtain a business license depends on the location from where you applied. The overall time can take from a few days to a few weeks to get a business license. Other than your chosen state, the time your application takes depends on several factors such as the type of license, paperwork, and more. For example, if you are applying for a business license to sell online, it’s likely that the processing time will be faster than applying for a state or federal liquor license. In case, you find it difficult to estimate the time range your business license application takes to approve, there are certain ways you can expedite the process.
For faster processing of your business license application from any state, city, or country, it is recommended that you apply online. Mailing an application or applying in person will take additional time. In addition, processing online applications is easier than postal applications.
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