To run a business legally, you need a number of different permits and licenses, but the exact requirements vary based on your location, industry, and various other factors. To guide you in the right direction, here is a run down of the most common permits and licenses with some extra information to help you decide what you need.
Business licenses are granted on the city level. Most towns and cities require local entrepreneurs to get a license before operating a business in the town. Depending on the rules in your area, this requirement can apply to everything from traditional brick-and-mortar businesses to turning your home into an AirBnB. Contact your city licensing department to find out what you need.
Usually, you have to meet zoning regulations, stay compliant with other local laws, and potentially provide access to a certain number of parking spaces. If you want to start a business in an area that is not zoned for that type of enterprise, you typically need to apply for a zoning variance. For instance, if you want to run a hair salon out of your home and you live in a residential area, you need a zoning variance.
Fire Department Permit
If your business uses flammable materials such as fuels, oils, paints, solvents, welding equipment, and more, you generally need a permit from your fire department. Before granting the permit, the fire fighters simply ensure that you have taken adequate precautions to keep you, your employees, and your neighbors safe.
You also need a fire department permit if you host people in your business, such as running a restaurant, daycare center, or retirement home. Some areas don’t require you to obtain a permit. Instead, they have you submit to regular inspections from the fire department.
Air and Water Pollution Control Permit
To safeguard the environment, many areas require certain businesses to get air and water pollution control permits. To find the exact requirements, you can check with your state’s Environmental Protection Agency (EPA). As a general rule of thumb, you need this type of permit if your business produces gas into the atmosphere or releases certain types of waste into the sewers.
Most municipalities have sign ordinances governing the size, location, and type of sign you can have. There may be height restrictions for business signs, laws prohibiting video displays, or other rules, and in historic areas, you may also have to get special permission from the local historical council. Before investing in a sign for your business, make sure you understand the rules in your area and what you need to do to get a permit.
County permits are very similar to municipal business licenses, but they are for businesses that are outside of city limits and located in the county. Generally, most counties have reduced business licensing requirements compared to most cities. You can learn more by contacting your county authorities directly.
State licenses tend to be specific to different industries. To obtain a state license, you usually have to meet educational requirements and potentially pass a licensing test. General contractors, plumbers, and electricians need state licenses, but so do insurance agents, real estate brokers, and lawyers. If you provide personal services including healthcare, spa services, massages, and more, you generally need to be licensed in your state as well. Keep in mind the requirements can vary from state to state.
Most businesses don’t need federal licenses, but if your products or services are subject to the guidelines created by a federal agency, you typically do need a federal license. For instance, if you do meat processing, you need a license from the United States Department of Agriculture (USDA). Similarly, if you’re running a radio or TV station, you need to meet criteria set by the Federal Trade Commission (FTC) which includes getting a federal license.
Sales Tax License
The majority of states have sales tax, and if you live in one of these states and sell taxable goods or services, you need a sales tax license. Sometimes called a seller’s permit or a certificate of authority, a sales tax license gives you the right to assess and collect sales tax. Then, you need to remit your payments to the government. If you run an online business where you make sales in multiple states, you may need sales taxes licenses for all the states where you do sales, but in some cases, you have to reach a certain threshold of sales before you need to worry about this requirement.
Health Department Permits
If required for your business, you can get a health department permit from the health department in your county. Restaurants must have a permit from the health department, but other businesses such as grocery stores, delis, coffee shops, breweries, wholesale food manufacturers, street vendors, and food trucks also need this type of permit. You may also need to contact the health department if you run a tattoo parlor or if you haul waste.
To get this permit, you need to submit to an inspection of your facility. You also need to agree to surprise inspections on a regular basis in the future. In most areas, inspections happen twice a year or in response to customer complaints. After the inspection, you get a seal of approval if everything looks alright. If there are minor issues, the health inspector usually gives you a chance to fix the problems and then returns for a follow-up inspection, but with major infractions, the health department may close your business until you rectify the issues.
Running a business can be a lot of fun, but to keep your business compliant with local, state, and federal regulations, you often need special permits and licenses. Before opening your doors, launching your website, or taking on your first client, make sure that you devote some time to figuring out which licenses and permits you need. You may want to consult with a professional to ensure you have everything in order.