Pros and cons

Best for

Can legally operate.
No stress.

Not good for

Costs money for a license.
May need additional licenses.
Have to renew license periodically

Additional Permits, Registrations, & Obligations

  1. Occupational Licenses – Occupational licenses required lots of additional permits. Prime examples would be finance, legal, daycare, healthcare, and insurance. You need to be qualified in your area to practice. These permits and registrations tend to change a lot depending on state laws, so make sure to double-check everything if you are planning on working in a different state. If you hire employees, make sure all of their credentials add up or you could end up on the wrong side of a court case.
  2. Sales Tax Permit – This applies only if you are selling tangible goods. But with the increase in online technology and accounting software, you can collect this from customers online. You can also submit online. Even when customers pay at the point of sale, the transaction is recorded in your software for easy analysis. The Sale Tax Permit often amounts to a kind of general state license, issued by state bodies.
  3. Zoning Permit/Waiver – Many residential areas are not allowed to be made available for commercial use. But you will be able to get a waiver as long as your business does not interrupt the neighborhood or disrupt traffic in any way. If you don’t have a zoning permit or waiver and the county clerk finds out, you will have to shut down.
  4. Doing Business As – The Doing Business As (‘DBA’ or ‘D.B.A.’) is sometimes called a trading name. It is often used for companies doing business in a different state. But you can use it in the same state. A sole proprietorship (the most common business model) will invariably get a DBA for branding purposes. Otherwise, their legal name will default as their business name for tax and regulatory purposes.
  5. EIN Number – The Employer Identification Number is required for businesses that hire employees. It is used for tax and is needed for many important documents. The EIN can be applied for and received within 10 minutes by visiting the IRS website and filling in some minor details.
  6. Business Bank Account – It’s always a good idea to separate personal from business affairs. While a small sole proprietorship might have less of a need to do this, it is still best practice to do so. Never mix work and pleasure, and it can get very complicated, very quickly. The business bank account will make it easier to apply for loans, looks more professional, and will help you with your business finances in comparison to mingling it with a personal account.
  7. Insurance – It is mandatory to provide insurance for all employees on your site. This is known as employer liability insurance. But you should not stop there. Business Interruption Insurance, as well as public liability insurance, is also necessary. If you work in professional services, then you need professional indemnity insurance (jobs such as doctors are known for huge levels of litigation). If you are selling products, then you need to get product liability insurance.

The Home Business License Explored in Depth

It’s no great secret that many people are working their little businesses from home without getting the proper licenses. However, this does entail certain risks. If your business grows beyond a certain size, then you might need to get a license or face fines. If you run a little restaurant or a salon from your home, you must get a business.

Otherwise, you could easily get reported (this happens more often than you would imagine). Another reason is that you might need your business license if you are applying for a business bank account for other accounts. But the most obvious reason to get a business license is for peace of mind. It’s cheap and easy to apply for, instead of looking over your shoulder all of the time.

In truth, there is no such thing as a ‘home’ business license. You will merely apply for a business license in the manner outlined above. And you then have a license to do business in your location (the fact that it is your home is irrelevant, as long as the premise is fit for customers and meets the regulations).

The license is only about $50 anyway – it makes sense to cover yourself and just take the time to fill in an online form.

The Bottom Line

There is no hassle in terms of getting a business license. The cost is low and the delivery is fast, practically any business can apply for one. The only thing you need to be made aware of is that different rules apply for the various states and counties and that some industries require additional licenses and permits.

Your secretary of state website and your local county clerk’s office will, together, have all the information that you need for business licensing in your area of operation.

About the Author

Daniel Lewis

Daniel Lewis

MBA Accredited Investment Professional

Daniel Lewis is an MBA accredited investment professional who wants to assist small business owners to gain access to finance. After going through many channels for funding, Lewis has found that getting the first loan right is vitally important for future success.

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