December 21, 2014

What You Need to Know About Business Licenses and Permits

building permit concept

If you’re launching a business, you’ve probably already looked into the option of incorporating or forming an LLC for your new company. This act registers your business with the state, and you should be all set to legally operate your business, right?

Not so fast. Incorporating or forming an LLC creates a legal entity for your business, but there are most likely other permits and licenses that you’ll need to obtain.

These permits are given out by state and local (county/town) governments. As such, specific licensing requirements vary by state, as well as by business. For example, a tattoo artist, daycare center or restaurant will be more tightly regulated than a copywriting business.

Failing to obtain the right permits and licenses can carry some pretty hefty consequences. In some cases, you’ll be required to pay fines and penalties. Worst case scenarios can involve criminal penalties, seizure of assets, and shutting down your business altogether.

Obtaining a permit is relatively easy to do once you know what you need. Navigating local licensing requirements and bureaucracies isn’t always straightforward. There’s no single website you can visit to give you all the answers.

To that end, below are a couple of tips to help you.

Determine What Type of Business Licenses and Permits You May Need

1. Start with your state and work down to the local level.

Your first step is to make sure you are compliant with the state where you’ll be operating your business. You can start your research at the SBA website where you can see which licenses and permits might apply to your business type and state.

In addition, visit your state’s website as many do publish a licensing/permit guide for starting a business.

2. At the local level, you’ll need to work with your town and/or county government to determine what you’ll need.

Some of the more common local permits include:

  • Local business licenses or tax permits (from your city/county clerk or revenue department).
  • Building permit (from your city/county planning department). You’ll most likely need this type of permit if you’ll be building or modifying a location for your business.
  • Zoning permit (from your city/county planning department). This permit is often needed when developing land for commercial use.
  • Health permit (from your city or county health department). Businesses that usually need a health permit include: restaurants, street vendors, catering trucks, beauty salons, tattoo parlors, nail salons, etc.
  • Home occupational permit (from your city/county planning department). In some jurisdictions, you’ll need a permit for a home-based business.
  • Signage permit (from your city/county zoning department). Some places require a permit (and compliance with zoning laws) before you can erect a sign for your business.
  • Fire permit (city/county fire department). You’ll most likely need to get a permit from the fire department if your premises will be open to the public or if you’re going to be using any flammable materials.
  • Alarm permit (city/county police or fire department). Your business will probably need to get an alarm permit if you install a burglar or fire alarm.

Most importantly, once you’ve obtained all the proper licenses and permits, your work is not over. You’ve got to make sure these licenses and permits stay in compliance and up to date. And that means two things:

  • First, you’ll need to renew each permit on time. Keep a master list of all your permits and their respective renewal dates.
  • Second, you’ll need to update any permits if you make any major changes to your business. For example, if you incorporate a sole proprietorship or change your business name.

Bottom line: Take some time to research your local licensing requirements and get the required paperwork in before you open your doors (or, as quickly as possible if your business is already in existence).

Getting your permits in order is a relatively easy in task and the fees are far less painful than having to fork over penalties or deal with more severe consequences.

Building Permit Concept Photo via Shutterstock

4 Comments ▼

Nellie Akalp


Nellie Akalp Nellie Akalp is CEO of CorpNet, her second incorporation filing service based on her strong passion to assist small business owners and entrepreneurs in starting their business. Free guides, advice and videos on small business legal topics are available at her Small Biz Corner.

4 Reactions

  1. Hi Nellie,
    Licenses and permits have to be one of the most onerous parts of the process for many small business owners. Thanks for an overview that makes it all seem comprehensible. Appreciate you sharing this with the BizSugar community too!

  2. The summary in this article is really handy. I am planning to start a new business and I was looking for this information. Thanks to Nellie for discussing on this issue with some great tips. I now need to understand my business first and then apply for the right license and permit making sure I have all the paperwork done before I start.

  3. This article is a must-read for anyone who likes to set-up a business. You got all the necessary permits covered. I hope you can also put up the processing fees. That will help most of the new business owners out there.

  4. Some policies and prerequisites differ depending on your state or region but more or less they meet the same standards, so be sure to look them up as well. Not only you can avoid penalties on the long term but these permits are proof that your business construction is safe.

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