Business license requirements for small businesses

Most small businesses will require several licenses or permits before they begin operating. These are typically issued by a state or local agency. Some businesses may also require a federally issued license.

These licenses and the associated fees depend on the nature of your business, its location, and regulations in your jurisdiction.

Obtaining all required business licenses is a critical step in starting your business. Operating without the proper licenses can result in fines, business disruptions, and damage to your reputation.

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.

What licenses do you need when starting a business?

When starting a business, you typically need a general business license, along with specific licenses depending on your industry and location.  

Regulated industries often require additional specialized licenses. Determining the exact licenses and permits you will need to legally operate can be challenging, especially since these can be issued by multiple authorities at the federal, state, and local levels of government.

Let’s look at the typical licenses being issued.

Local business licenses

The city and/or county can require a small business to obtain one or more licenses and permits. These requirements are usually determined by the type of business being conducted. For example, a restaurant will need occupancy, building, and health permits, while a consulting business may only require a general business license.

• Business operating license or general business license
• Zoning and land use permits
• Health license and permits
• Building permits
• Certificate of occupancy
• Environmental licenses and permits
• Signage license or permit

Compliance best practices

It’s important that you maintain your business licenses and remain in good standing with licensing agencies. Here are several best practices that can help.

Keep a master list of all renewal dates

Keep a record of license or permit renewal dates and make sure your master list includes the information and fees associated with renewals. Once you have your master list, set up a reminder system that alerts you of pending renewals in advance of deadlines.

Add “update business licenses” to your to-do list

Each time there is a change to your business operations, check to see if there is any 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 business name, or restructure your business entity type, you will need to update your licenses accordingly. You may even need to update your information if you change your hours or days of operation.

Complying with business license laws and regulations can be time-consuming and costly. Keep good records of each transaction, the type of license, associated fees, the date paid, and receipt of payment.

Consider working with a managed service provider

Outsourcing business license research, applications, management, and renewals can help you take the pressure off internal resources and allow you to focus on your core activities. By working with a full-service management service provider who specializes in the efficient processing of business licenses, you can free up your staff to focus on high-value business activities while ensuring you keep up with changing compliance requirements.

Learn more

To learn more about how CT Corporation can help you manage your business license needs, contact a CT Corporation business license specialist.

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