Obtaining all required business licenses is a crucial step in starting your business. Most businesses will need multiple licenses or permits, usually issued by a state agency. Some businesses may also require a federally issued license.
These licenses and associated fees depend on the nature of your business, its location and the regulations in force in your jurisdiction.
In this article, we explain the different business licenses and permits a small business may need and best practices for staying compliant with rules and regulations.
Understanding commercial licenses
Determining the type of license you will need to operate legally can be difficult, especially since these can be issued by several authorities – federal, state and local.
Let’s look at the typical licenses issued:
Local government licenses
Common licenses issued by the local government, such as your city or county, include:
- Business License or General Business License
- Zoning and Land Use Permit
- License and health permit
- Building permit
- Environmental licenses and permits
- Signal license or permit
State government licenses
State-issued business licenses and permits are generally required for essential business functions, such as a license to sell, or for tax purposes. These include:
- State business license
- Vendor or sales license or permit
- Tax registrations and permits
- professional license
- Unemployment insurance permit (required if you have employees)
- If you sell certain products, such as alcohol, firearms, and gasoline, you will need a product-specific license
Federal government licenses
If your business is regulated by a federal agency, you will need to obtain a federal license or permit. Here are some examples :
- Drug Manufacturing (issued by the Food and Drug Administration)
- Alcohol, tobacco, or firearms (issued by the Bureau of Alcohol, Tobacco, Firearms, and Explosives)
- Investment advice (issued by the Securities and Exchange Commission)
- Mining and Drilling (issued by the Federal Maritime Commission)
- Transportation and Logistics (issued by the US Department of Transportation)
- Radio and Broadcasting (issued by the Federal Communications Commission)
How long does it take to get a commercial license?
The time it takes to obtain a business license can vary depending on the type of business and the jurisdiction in which you operate. Some agencies issue licenses within a week; others may take several weeks or months.
CT Corporation can help you identify, obtain and maintain the business licenses, permits and tax registrations your business needs. With our proprietary technology, CT Corporation helps ease the burden of commercial license management.
Compliance Best Practices
It is important that you maintain your business licenses and stay in good standing with licensing agencies. Here are several best practices that can help you.
Keep a master list of all renewal dates
In addition to keeping a record of license or permit renewal dates, make sure your master list includes information and fees associated with renewals. Once you have your master list, set up a reminder system that notifies you of pending renewals before deadlines.
Add “update commercial licenses” to your to-do list
Whenever there is a change in your business operations, check to see if there is an impact on your existing licenses or if there is a need for additional licenses. For example, if you start selling or manufacturing a new product line, change your company name, or restructure your type of business entity, you will need to update your licenses accordingly. You may even need to update your information if you change your opening hours or days.
Complying with trade licensing laws and regulations can be time-consuming and expensive. Keep good records of each transaction, type of license, associated fees, date of payment, and receipt of payment.
Consider working with a managed service provider
Outsourcing commercial license research, applications, management and renewals can help reduce pressure on internal resources and allow you to focus on your core business. By working with a full-service management service provider that specializes in efficient processing of trade licenses, you can free up your staff to focus on high-value business activities while ensuring you keep up with changing compliance requirements.