You must be wondering, “Do I have a requirement of obtaining a business license if I am about to start a business?” Well, yes of course, and in order to get a business license or permit for online and home-based businesses, we must go through the same regulatory channels as traditional businesses.
The goal of any business is to generate revenue through the sale of goods and services to potential customers and the same regulations apply to home-based or online businesses for the purpose of tax collection and to safeguard the public.
Whether you are establishing a home or online business, you must keep in mind the following:
Heavy research is necessary because the license/permit can be an undertaking if you are not prepared. Failure to gain the necessary permits in time can delay the start of your business.
Suggested Blog – Legal Requirements For Starting A Business
For home businesses, you may need to register a standard business license.
Business licenses are necessary mainly for two reasons:
(a) Protection: Licences are necessary for the purposes of identifying businesses dealing with the general public in a particular area.
(b) Income: Business licenses also generate revenue for local governments.
Business licenses require little maintenance and must be renewed each year. For online businesses, it is required to collect taxes from your customers. Just ask your state officials if your business has a requirement to impose a sales tax. To collect taxes, you need to get a tax permit.
In most instances, you need to know and be aware of what is known as a Sales Tax Registration before you engage in commerce. In order to explore more about Sales Tax Registration, visit the Department of Revenue website for your state.
To find out if your business needs a special certificate or license, research your state’s business laws.
Certain states may require you to get a permit even if you have no other employees than yourself. Further, you will need a special permit if your business weighs items that are for sale. You also need a permit from your local country or “fire protection district” if you intend to have a commercial fire alarm on your business site.
For home-based child-care services, a local fire inspector may check your home before you open for business. Inspections are also necessary if your business involves the preparation of food. State and local permits may be necessary in other cases.
Special license requirements apply for businesses operating in a residential zone, but your local government grants general permits on a case by case basis. For instance, you must have to have a special permit if you wish to operate a salon from your home. There are two types of licenses for home-based businesses
(i) Signage
(ii) Occupation
Occupation permits are known as “Home Occupation Permits”, which restrict excess noise, additional traffic, and hazardous environments to prevent the interruption of residential life in the area. Local permits are subject to the jurisdiction of local ordinances.
Ordinance restrictions may come in the form of
Signage restrictions are common in most counties. Strict signage normally applies when your business operates in a residential district. For this reason, just consult with your local government and local ordinances before ordering any type of sign for your business.
Businesses are not subject to federal or state oversight but adhere to local permit standards. Permits are significant and needy for businesses that garner car or heavy foot traffic. Ask your local office if you plan to have foot traffic coming to your location.
More importantly, businesses in the business of food preparation are subject to permit regulation and undergo regular inspections from the Health Department. A DBA – Doing Business As a certificate may also be necessary for businesses that solely operate via computer or phone. A DBA certificate is also required if you have a desire to operate your business through a fictitious name, including names that are not your legal name.
The nature of your business is key when it comes to government regulation. And you can also create and consider a separate business name while ensuring products to give yourself additional legal protection. Contact an attorney or accountant to determine if you need an LLC or corporation and what type of permits or licenses you may need for your business.
Certain business activity in residential zones is barred entirely, such as auto repair shops. Your first step is to contact your zoning office. In order to get exact and correct details about if your business would be banned due to zoning issues, then you need to contact your local zoning officials.
If you stuck in zoning issues, then you could fix the issue with little adjustments to your business plan. If local zoning restrictions prevent business operations, a variance may be necessary. A variance is a permission given by local authorities to operate or run a business outside of zoning.
If you need a variance, you can make some solid arguments:
Income Restriction: The zoning restriction would prevent you from making a living.
No Harm At All: Convey to officials that your business would not disrupt and make disturbances for residential life.
Similar Businesses: Highlight other businesses in the area in the same market.
With that, it is always best and suitable to conform your business plan to local zoning laws because the variance process can be an expensive and time-draining endeavor.
In addition to local zoning, your Homeowner’s Association (HOA) may restrict your business activity. Many HOAs have the authority and rights to manage the activity of single-family homeowners. Research your HOA rules and try to get a waiver to the rules if necessary.
Licenses are required for three main purposes
Licenses and permits are required. You must have every permit and license in order before legally operating your business. Also, you must register with taxing authorities if your company has staff or offers taxable services or goods. Requirements depend on where and how your business is conducted and they differ by niche.
Tax registrations, business licenses, and permits are given out and managed by every level of government, local, state and federal, which counts municipal and county governments as well. In a lot of instances, you might require a license in each level of government. Also, there are many different departments and agencies that are part of the process of licensing.
There are more than 40,000 individual licensing jurisdictions in the U.S., and everyone has specific needs for licensing. Failing to recognize license, permit and tax requirements may leave you exposed legally and put your business at risk.
With people pushing against increasing traditional taxes, governments are ever on the watch for different streams of revenue, meaning increased vigilance against evaders of business licenses. Some even hire collectors from a third party entity.
A business may not open its new location if you are not properly licensed. Your property could get a padlock if you are not properly licensed. Moreover, you could be given personal liens or expensive fees and interest if not properly licensed.
The same home-based rules are applied to online businesses when it comes to rules and regulations. For example, online businesses that retain employees need to be registered with the unemployment and workers’ compensation departments. Online businesses do not need to worry about zoning and signage laws, but sales may be necessary for some transactions. Online sales tax regulations can be tough and troublesome, which is why the services of an accountant may be useful before you engage in online commerce.
You might want to research the requirements on your own, but many figure it out it’s next to impossible. You might get a hold of City Hall, but only doing that will not aid in determining the requirements for licensing on your state and county levels. And governments do not provide a one-size-fits-all solution where you gather your permits, tax registrations and licenses.
One of the first decisions you must have to take at the time of deciding to go into business is the choice of a legal structure for your enterprise. The legal and authorized structure of your business should be the first trait and priority of any new business. Small business owners usually choose an LLC, while other start-ups need to acquire business licenses from the local, state or federal government.
The location and the nature of your business determine if should register for an LLC. An LLC protects organization members from legal recourse without corporate registration. LLCs are regulated at the state level, whereas corporate registration is subject to state and federal taxation. The LLC itself is not responsible for income taxes, but individual members of the LLC are required to pay personal income taxes.
Certain industries are subject to federal jurisdiction, like alcohol, agricultural, firearms, fish and game, mining, etc. Federal paperwork seems a lengthy process. Further, you could end up dealing with several agencies depending on the nature of your work. For example, you could find yourself under the umbrella of securities regulation if you are starting an LLC or corporation and have co-owners who are not active participants in the business.
Additional certification and licensing are necessary for such fields as law, education, and medicine. Private investigators, building contractors, auto technicians, and real estate agents must get licenses from the Secretary of State department. In the realm of retail sales, a permit is necessary and required to collect sales taxes.
Business licenses are obtained in order for an enterprise to legally function as a business. Laws are different in each state, so it is essential to know the licensing guidelines of the state where you are filing. Failure to conform can have severe penalties.
You may have to get a license from the town where you are planning to set up your business. Whether or not you will be renting a work area or working from your private home, you will have to get a license for that location. Each city has a database with an inventory of addresses that fall inside that municipality. Search online in your city for enterprise license type to find the right web page.
The US Small Business Administration (SBA)’s website also has this information. Whether or not you might be simply starting out in business or firing up another new enterprise, the SBA has a wealth of knowledge, not simply on guidelines and laws, but for many areas including how to choose a business name on how to get funding.
The SBA webpage on permits provides info on where to get your license. Different business types have different codes, and you may have to know this information to get a license. Different codes require specific processes and each city and state has its own set of requirements.
If you happen to use the SBA website, you will have to find your company’s state and narrow your search by location. Chances are you will be introduced to an inventory of links and knowledge related to acquiring a license or registration.
You will also need to complete different kinds of forms or online applications to apply for permits specific to your business. For instance, if you are going to be working from home, planning to transform your work area, planning to make use of hazardous supplies, selling food, etc.,
you will have to be sure to get the right permits and forms. You can find this information online, or you will be able to print the forms and fill them out by hand. Some states make provisions for filling out the applications immediately online, but they will usually require you to create an account before you can do so.
You will generally be required to provide the following information about your business, in addition to other information specific to the type of business you are operating:
Use a website or USPS mail to file your forms with your city’s finance division. Your city’s website will include the right contact data for your needs. Every city has its own requirements relating to submitting payments that go with the license you are applying for.
Payments can range from $50 – $400 or more, depending on what sort of business you are in. Also, the time it takes to process your license will differ depending on the kind of entity you are creating. For instance, a DBA would possibly take only a couple of days, whereas a corporation might take as much as two weeks. Every state will differ.
In some cases, you will want to apply for your license in person and supply identification to show you are the business owner. You may need to get fingerprinted, as well, if you are applying for any type of security industry license.
When you begin working, it is vital to comply with the foundations laid out by your city for the kind of business you are running. For instance, in the event, you opened a restaurant, make sure you get the required permits, a liquor license, or food inspections.
You will have to also renew your license to stay in compliance with your city’s legal guidelines. Not renewing your license can mean that your business is unable to operate. Most companies want a normal business license to function in a specific city or county. There are sometimes local tax-related licenses, too.
There are many tax registrations, business permits and licenses that a company might need. Below are a few of the most common ones.
If you ask yourself: “Do I need a business license?” the answer will inevitably be yes. Almost all businesses need one or more licenses to start and operate their businesses legally, whether at the local, state, or federal level.
As you go through the different types of business licenses discussed above to determine which ones you will need, remember that you can always consult the SBA or your local government agency for assistance with the licenses required to start a business.
If you have figured out which licenses are required for your business and when do you need a business license, the answer is as soon as possible. Once you have started your business with the appropriate licenses, you will also want to display your licenses properly, make copies for your records and keep track of any renewal dates to ensure you are always operating legally, and of course, to avoid possible fines or penalties.
