Virtually every business must comply with various licenses, permits or registrations. Not only do these tasks need to be handled when starting out, but also when growing or expanding an existing business, and even when deciding to close or sell a business.
License, permit and registration requirements vary by the type of business and may be imposed by authorities at the local, state, or federal levels. For tips on handling these obligations, see our related article, Understanding business license requirements and obligations.
This article addresses the importance of keeping your licenses up to date and active by renewing or updating your information.
Staying compliant with business license, permit and registration requirements
Staying compliant requires keeping up with renewals and complying with other regulations or requirements levied by agencies.
If you decide to do this with internal resources, it’s a good idea to track all renewal dates in your calendar system and set up early reminders that provide you advance notice of due dates. Also, your business records should include copies of applications and licenses.
Each authority has its own procedures for completing forms and paying associated fees and taxes. Business license management software typically accounts for this and associates’ entities with locations.
Why keep up with business license renewal requirements
After your business license application is accepted and you receive your license, you're legally authorized to operate that business for a specific duration. Nevertheless, several business licenses require renewal, so be sure to take note of any renewal prerequisites to prevent your license from lapsing. The renewal term can vary, for instance, annually or every five years, depending on the kind of license.
Keeping your compliance up-to-date helps to maintain your business’ good reputation and goodwill, in today’s increased focus on compliance and transparency. It also heads off potential delays in opening a new location or introducing or expanding new products or services.
Failing to renew your business license can lead to penalties, fines, and even business closure until the matter is resolved. During this process, your business may lose revenue and still be responsible for expenses such as rent, salaries, utilities, and more.