Starting a business can be a great way to jumpstart your career or make some extra money. However, it's important to legitimize your business by obtaining a business license for your particular industry. Although this is a fairly simple process, it's necessary to understand how the type of business you have affects the license you'll need. Additionally, you'll want to prepare for the paperwork and application fees involved in the process. Read on for more information on how to obtain a business license.
Define Your Business
The first thing you need to do before applying for a business license is to determine the type of business you have. As it turns out, this may affect how you will need to go about obtaining a business license. The majority of business owners can apply for a license at the local or state level. However, those who plan to open a business in an industry regulated by the federal government should plan to apply for a business license on the federal level. The following are some of the main industries which are regulated by the government, followed by the federal agencies through which a business license must be obtained:
- Agriculture: U.S. Department of Agriculture (USDA)
- Alcohol: Alcohol and Tobacco Tax and Trade Bureau (TTB)
- Aviation: Federal Aviation Administration (FAA)
- Firearms/Ammunition/Explosives: Bureau of Alcohol, Firearms, Tobacco and Explosives (ATF)
- Fish and Wildlife: U.S. Fish and Wildlife Service (FWS)
- Commercial Fisheries: National Oceanic and Atmospheric Administration (NOAA)
- Maritime Transportation: Office of Transportation
- Nuclear Energy: U.S. Nuclear Regulatory Commission (NRC)
- Radio and Television Broadcasting: Federal Communications Commission (FCC)
It's important to follow federal, state and local guidelines and ensure that you apply for a business license through the proper avenues. Failing to adhere to the licensing rules for your locality or state or for the federal government may result in sizable fines and could put your business at risk.
Follow Local Procedures
Once you've determined the type of business you have, you can begin the process of applying for a business license. Most individuals will go through their state or local government in order to complete this process. Though rules may vary slightly in different cities or states, the process is generally the same when applying for a business license:
- Visit a state or local government administrative office. This is often at the local City Hall or at the State Capitol. (Note that in some cases it may be possible to complete an application for a business license online.)
- Go to the department of business affairs and request an application to obtain a business license.
- Fill out the application carefully with all of the required information.
- Turn in your application for a business license. If possible, have an attorney or someone from the business affairs department review the application before you submit it.
- Wait for approval from the city or state. This could take days, weeks or months depending on where you live and what type of business you plan to establish.
Be sure to have the proper information on hand when you fill out your business license application. This includes general information such as the business name and address, the square footage of the business location, a detailed description of the business's activities and purpose and photo identification for all the applicants involved. Business owners who need to apply for a business license through a federal agency will follow a similar process. However, the application procedure may be more detailed or complex and it may take longer to have your license approved when obtaining a business license at the federal level.
Paperwork & Fees
Throughout the process of applying for a business license, keep records of all of your information and of the application itself. This will be essential for both business and tax purposes. Keep these documents in a safe place and consider giving copies to your attorney.
In addition, be sure to note the process for a renewal when you go in to apply for your business license. Most business owners will have to renew their business license periodically and it's critical to follow the local, state or federal guidelines for this process if you want to avoid expensive fines or having your business shut down.
Finally, expect a fee of some kind to be paid when you submit your business license application. Keep a record of this payment as well since this may be tax deductible in some situations.
Business owners who follow the instructions above will generally encounter few challenges when applying for a license for their business. For more information on the specific rules and regulations for obtaining a business license in your area, visit the website for the U.S. Small Business Administration at www.sba.gov.