To ensure a business license is active and in good standing, you must maintain it. This typically involves renewing a license annually or every set number of years, depending on the license.
Business license renewal can be as simple as paying an annual fee or as complex as submitting detailed financial information, bonds, or paperwork. In this article, we explore what happens if your business license renewal is late and what to do if your license expires.
Many business licenses must be renewed annually (every year) or biannually (every two years). However, licenses can have varying expiration dates, depending on the license category and the jurisdiction. Even within one state, there can be different rules for business license renewal for different types of businesses.
Jurisdictions and agencies often issue a penalty for an expired business license — with penalties increasing over time. In some cases, a business license is considered expired even if the renewal filing is one day late. Frequently in these instances, the business may be required to halt operations.
As a business owner, it is your responsibility to pay the license renewal fee by the due date, even if you did not receive a renewal notice.
Obtaining necessary licenses and permits is a legal requirement for a business. A business that is discovered to be operating without the required licenses and permits may be forced to temporarily halt operations or shut down entirely. In certain cases, a business owner could be arrested and charged with operating without a license.
If you close your business or move it out of a jurisdiction, you need to cancel all relevant registrations, permits, and licenses. Some authorities impose additional business license taxes, assessments, fees, and other penalties based on the expiration date of the current license and the date that you cease operating.
If your business license has expired, contact the issuing board to determine your options. In some cases, there may be a window in which a renewal can be submitted late. In others, you could be subject to a penalty fee. Some licensing boards might cancel a license as soon as it has expired and require a reinstatement application to bring the license back to active status.
To learn more read: My business license is expired. What should I do?
There was a time when businesses risked a "pay fines as you go" approach. However, because small business licenses are public documents, failing to stay compliant could lead to negative publicity and serious reputational harm.
State regulators are moving aggressively to identify and penalize unlicensed business operations. In some instances, a late business license renewal can trigger action by the licensing agency.
If your business operates without a license — or with an expired license — you may face penalties, such as harsh fines and/or cease and desist orders. Some authorities can even permanently revoke a license for egregious behavior. Others can force your business to return all profits collected during the unlicensed period.
Making sure you know how to renew a business license or business permit will help to keep your business in good standing with the authorities.
Business license management is challenging. It can be confusing to understand exactly what type of license you need, how to register your business, and when and how to renew a license. CT Corporation is here to help.
Learn more about how CT Corporation can help with your business license needs. Contact a CT Corporation specialist or view our Business License Solutions.
