How to Get Local Permits & Licenses
Beginning the journey to entrepreneurship is an exciting prospect. However, before jumping in and getting started, you’ll want to make certain your company secures the correct business permits and licenses it needs to operate in accordance with local laws. Not following your state, city, or county’s laws can result in severe penalties and problematic issues.
The prospect of applying for permits and licenses can be intimidating, but here we’ll give a basic run-down to help simplify the process. Understanding the complexities and knowing how to be compliant with regulations will help make the process far less overwhelming.
Make your business official with an EIN
One of the first steps you should take, along with deciding upon your business structure and then registering it, is to apply for an Employer Identification Number (EIN). You’ll need this unique identifier to show local officials your business exists. The EIN works like a Social Security Number but is used strictly for businesses.
Additionally, you’ll want to obtain this unique identifier not just for permits and licenses but so you can hire employees, file tax returns separately from personal taxes, open business bank accounts, and pursue business loans. You can apply for an EIN via mail or online.
Why do you need permits and licenses for your business?
You’ll need to adhere to federal, state, and local requirements to legally operate. To do this, businesses need to secure specific permits and licenses. Going through the correct channels demonstrates to the public you:
● Can legally operate your business
● You meet the legal standards for your area
● You meet the legal standards for your industry
● Are up-to-date on health and safety guidelines
The types of permits and licenses businesses obtain before they operate vary depending on the specific type of company being run. You’ll probably discover you need to obtain a combination of permits and licenses.
Choose the type of permit or license your business needs
Carefully perform research to learn precisely the different permits or licenses your company needs to have in place. Common types you may find you must obtain may include the following examples.
Examples of business licenses
This is a general overview of license types but is in no way a comprehensive list. Always check with your state, local, and federal rules to determine if you need to secure a special type of license to operate legally.
● General business license to operate in your state, county, or city
● Home occupation license to run your business from home or in a residential neighborhood
● Health and safety and/or environmental licenses if your company manages safety or environmental hazards
● Alcohol sales and production if your company is a restaurant, bar, retail, production facility, or transports alcohol
States often oversee certain industries, including but not limited to medical care, law, insurance sales, real estate sales, personal financial advising services, auto repairs, cosmetology, and other services/sales types.
Examples of business permit types
The types of permits you’ll need to secure to operate legally also depends on the type of company you run, what industry it’s in, or your business plans.
● Sales tax (or “seller”) permits to sell goods and collect sales tax if your state requires businesses to charge sales tax to consumers
● Zoning permit to operate a business in a designated location
● Location and land use permits to reserve the right to operate a business from a specific location, usually issued by county or city officials
● Building or construction permits if you need to do major repairs, expansions, or other modifications to your business’s location
This also is not a comprehensive list but includes some of the most common types of permits. Other potential permits you might need include a sign permit, fire department permit, or health permit, to name a few. Always check with your state and local municipality to see exactly which permits you should apply for.
Prepare and submit your application for a local permit or license
Each state has a website for both licenses and permits to help you find the proper forms you need to file. In the event you’re required to have a federal license or permit, check with the specific federal agency to obtain the correct forms.
Once you’ve located the right forms, you can start to fill out each application and gather the required documents. Common types of documentation you’ll need to provide to governing agencies include:
● List of owners, managers, and investors allowed to sign on the company’s behalf
● A description of your business, its location, and what types of products or services it offers
● Pertinent business records relating to business structure and bylaws
● Financial records and statements
● Insurance details
Additionally, you’ll need to pay any required application filing fees. Keep in mind, your licenses and permits may go to several different federal, state, or local agencies. Be sure to keep each application in order and submit payments to the correct agency. In some cases, you may mail in applications or, in others, file through an online portal.
Wait for your permit or license application to be approved
Once you’ve submitted your application and permits, you might wonder how long it will take to receive approval. Unfortunately, there is no one standard answer to this question. Ultimately, it depends upon the specific agency, how many applications it receives, and if there is a backlog of applications. It may take days or months. In the meantime, you can move on to other important tasks involved with launching a new business while you wait.
Don’t forget to renew your local permits & licenses as needed
Keep in mind that obtaining local permits and licenses is not a one-and-done task. Many types of licenses need to be renewed on a regular basis. Determine which licenses and permits you’ll need to renew and keep a running list complete with dates. Most expire after one to three years, so set reminders. This way, your important ones do not lapse and jeopardize your company.