When you first plan to start up a new business, there are a few legal issues that you will need to take care of. One of these legal issues is your business license. Depending on the type of business that you are planning to start, you will likely need a license of some sort. Nearly every business in the world requires a license or a permit in order to legally operate. Knowing which license you need can be confusing. It will depend on your business type and entity as well as where your business is located.
The main reason that you need a business license is so that your business revenue can be tracked for tax purposes. A license can also help to protect the public. If you are engaging in an industry that is federally regulated then you will need a federal license. If you are selling retail products then you will need a sales license. It can all be very confusing but if you consider your specific type of business then the process of determining which license you need is a bit easier.
It is unlikely that you will require a professional license unless you are a doctor or veterinarian who is opening a new clinic. Dentists, lawyers and hair dressers also require professional licenses and most of these industries require that you maintain insurance to protect you against lawsuits.
Even if you own and operate a home based business, you may need a license or a permit from your local government in order to operate that business legally. If you are unsure of whether or not your home based business requires any legal permits, you can contact your local courthouse and speak to the right department to find out.
You should also note that licenses and permits are not forever. They must be renewed regularly, typically once each year and it is important to keep them current and up to date. You should always maintain a copy of your business license for your records and if you have a traditional brick and mortar business location, it is a good idea to display your license where it can be seen by the public. In fact, this is required in many cases. Most states require that you prominently display your license where it can be seen by anyone who walks into your business. Also note that if you plan to expand your business in the future, additional licenses or permits may be needed in order to keep you compliant with state and local laws.