Starting a business can be exciting and rewarding but comes with many responsibilities. One of the most important business tasks is obtaining the necessary licenses and permits. Licenses ensure you run your business legally and keep it and your customers safe.
At Amerant, we believe in the success of our small and commercial business partners, so let’s explore the different types of business licenses and why they are important for your business.
Why Do You Need a Business License?
Before diving into the different business license types, let’s first understand why they are necessary. A business license is a legal document that allows you to operate your business in a specific location. The government uses these licenses to control businesses and ensure they obey all laws and rules.
Having a business license also provides credibility to your business. It shows that you have met all the requirements and the government has approved you to operate. This can be important for building trust with potential customers and partners.
Protecting Your Business and Customers
Obtaining a business license also protects your business and its customers. If you own a business, the type you have might determine if you need safety measures and inspections to keep your customers safe. This not only protects your customers but also protects your business from potential lawsuits.
A business license also ensures that your business follows all laws and regulations, which can prevent costly fines and penalties. Plus, it helps to create a level playing field for businesses. All businesses must obtain the necessary licenses and permits.
States like Florida and Texas do not require a general business license to operate a business. Still, depending on the industry, they must obtain special or occupational licenses and other certifications. This can vary at each level – local, state, and federal. Most banks and lenders only consider funding if a business incorporates and has the necessary licenses.
Types of Business Licenses
Now that we understand the importance of business licenses let’s explore the different licenses required for commercial or small businesses. Local, state, and federal levels have their business requirements.
General Business License
A general business license, or a business tax certificate, is the most common type of license required for businesses. This license is typically issued by the city or county where your business is located and is required for all businesses, regardless of the type of business or industry.
The general business license ensures your business follows local laws and rules, like zoning and building codes. It also allows the government to track and regulate businesses for tax purposes.
Professional License
A professional license is a requirement for businesses that provide professional services. This includes doctors, lawyers, and accountants. State agencies issue these licenses and require specific education, training, and experience in the field.
Professional licenses protect the public from unqualified individuals providing professional services. They also ensure that businesses follow all laws and regulations related to their industry.
Occupational License
An occupational license, also known as a trade license, is a requirement for businesses that provide skilled trades. Examples include electricians, plumbers, and contractors. Like professional licenses, state agencies also issue this type of license. It also requires specific education, training, and experience in the trade.
Occupational licenses protect the public from unqualified individuals performing skilled trades. They also ensure that businesses follow all laws and regulations related to their trade.
Sales Tax License
A sales tax license, also known as a seller’s permit, is required for businesses that sell goods or services subject to sales tax. The state typically issues this license and allows businesses to collect and remit sales tax to the government.
A sales tax license ensures that your business follows all laws and regulations related to sales tax. It also allows the government to track and regulate businesses for tax purposes.
Health and Safety Permits
Depending on your business type, you may be required to obtain health and safety permits. State or local agencies typically issue these permits. They ensure that your business follows all health and safety regulations.
A restaurant must get a health permit to handle food properly and keep things clean. A daycare requires a safety permit to ensure the facility is safe for children.
Specialized Licenses
Some businesses may require specialized licenses depending on the industry they are in. For instance, businesses that sell alcohol need a liquor license, and businesses that sell guns need a firearms license.
These specialized licenses are typically issued by state or federal agencies and require specific training and background checks. They are important for regulating industries that may pose potential risks to the public.
How to Obtain a Business License
The process for obtaining a business license may vary depending on the state and type of license required. In general, for states like Florida and Texas, here are the steps you can follow to obtain a business license:
- Research the specific requirements for your state and industry.
- Determine the type of license(s) you need for your business.
- Apply for the necessary licenses through the appropriate agencies.
- Pay any required fees.
- Keep your licenses up to date by renewing them as needed.
Having the necessary licenses and permits for your business is essential in starting and operating a successful business.
This means your business operates within the law and keeps your business and customers safe. Once you’ve got this setup, you can move on to steps like setting up your business banking account and ensuring funding through business loans offered by Amerant. By learning about the types of business licenses and the requirements in your industry and state, you can ensure your business is ready for success.
