Running a small business involves a significant amount of paperwork, including obtaining any licenses and permits your state requires. Simply put, a small business license enables you to legally carry on the affairs of your business in the state where you hold it. What you need will vary depending on the activity of your business, your location and other specific governmental regulations.
Even if you haven’t had to get one yet, every business owner should know how to obtain a small business license. Let’s break it down, step by step.
What Kind of Business License Do I Need?
The kind of business license you need depends on the type of small business you have and where it’s located. Certain operations require a combination of state and federal licenses.
The first step in determining what kind of license you need is to see if any of your business activities are regulated under a federal agency. If your business falls under any of the following categories, you may need to acquire special federal licensing.
Any business that accepts or transports plants, or animals or organic matter across state lines might need a special license from the USDA.
Brewing, selling, importing or wholesaling alcoholic beverages falls under special licensing rules from the Alcohol and Tobacco Tax and Trade Bureau and your local liquor control board.
Aircraft training, transportation and maintenance fall under this category. See the FAA for details.
Firearms, Ammunition and Explosives
Businesses creating or selling firearms, ammunition and explosives have their own requirements.
Fish and Wildlife
You’ll need a license from the U.S. Fish and Wildlife Service.
Requirements come from the Oceanic and Atmospheric Administration Fisheries Service.
Overseas transportation and shipping companies must obtain licensing from the Federal Maritime Commission.
Contact the U.S. Nuclear Regulatory Commission.
Radio and Television
You’ll need to contact the Federal Communications Commission.
Transportation and Logistics
Operators of oversized vehicles need special licensing from the U.S. Department of Transportation.
Don’t be too surprised if your small business falls into one of these categories. The definitions are broad enough that they include many common types of small businesses.
How Much Is a Small Business License?
Each governing entity sets its own rates for business licenses, so the cost varies from state to state. States do, however, strive to make licensing fees affordable for businesses of all sizes. You can usually expect to pay in the neighborhood of a few hundred dollars, but no more than that.
How Long Does it Take to Get a Business License?
The process of obtaining a business license varies depending on if it’s coming from a state or federal agency. It depends on the type of license you’re applying for, your industry and how accurately you complete the application forms.
If a governing entity has a backlog of applications, it can also cause delays. Most licenses take up to a month or more to receive. Because there’s no concrete way to determine how long it will take, you should start applying for a business license as soon as possible.
How to Obtain a Business License in Each State
In addition to obtaining any federal small business licenses, you may also need one or more from your state’s governing agency. Each state has its own process for issuing small business licenses, but figuring out how to get one is easy. You’ll just need to contact your state’s governing authority to verify whether or not they require it. If you do, you’ll start the application process. In most cases, you’ll be able to apply for your business license online.
To help you learn exactly what forms you need to fill out, what documents you need to submit and how much licenses cost where you do business, we’ve put together a list with a link for each state.
Local Business License Requirements
Some cities issue small business licenses as well. These are typically based on the type of business you’re in and how that business affects the city’s limited resources and its local regulations, such as parking and road signage.
For instance, your city may have a stipulation that all business signs conform to a certain size specification. If you want a larger sign, you may have to pay for a special license. Confer with your local government to ensure that you comply with all licensing requirements.
Licensing: A Necessary Step Toward Success
It’s essential for your business to be properly licensed. Federal, state and local governments can issue stiff penalties for failing to complete this fundamental step. But remember, all levels of government want your small business to succeed; your success not only means more tax revenue, but it creates jobs and stimulates the economy.
Business licenses are not just a ploy to collect fees. They work to protect the interests of you and your customers. Proper licensing ensures that all businesses are following the same rules and no one has an unfair advantage. If you haven’t already, check to make sure you’re up-to-date and, if not, apply for any small business license you need today.