Business License: Who, What, Where, and Why?

Anyone who is lucky enough to be struck by a profound, world changing idea that they believe will shake the very foundation of modern society should consider opening a business. After the initial epiphany settles into a marketable idea then comes the logistical side of creating that dream on the American market.

The ‘who’ of this equation is really quite simple. Anyone looking to open a business needs to follow the correct legal pathways in order to operate their business legitimately. Even a business run out of a person’s garage still requires some form of license. While this may seem like the government is being far too intrusive, it is actually a safety measure taken in order to protect all persons involved with the venture. Be it the customers or the proprietor.  That topic will be further discussed later; first one must know what kind of license is required for their establishment.

In short, the answer is that it depends. There are two major factors that come into play when discerning which type or types of business license one will need in order to operate in full accordance with the law. The first is industry. What sort of business is being opened? For example, when opening a mini mart one would need to consider if they wanted to sell liquor. If that is the case then they would need to obtain a liquor license. If the business deals with flammable material that are open to the public then a Fire Department permit may be needed. What it boils down to is knowing what it is the business will be either selling or working with on a daily basis and determining which legal documents are necessary for permissible operation.

This leads to the next important factor which is location. Different states, counties and even cities can have different regulations depending on a number or factors. For example, taking a look at the very popular chain Starbucks depicts a few of the different state to state regulations that are in place. The Starbucks in Hawaii do not require their employees to have a food handlers permit. However, in California it is absolutely necessary to have one in order to prepare and serve food. Different states, different laws; it is of the utmost importance to look into every aspect of a business in order to make sure that it is being run in a way that upholds all codes. This isn’t just state to state; licenses and permits can change if one is operating within city limits or not. That is not to say that one should limit themselves to only looking at local laws. There are also federal laws to contend with as well.

Now that it has been established that one must discern which type of license they need, the next step is where to obtain one. As mentioned before, all levels of government issue them. Be it federal, state, or local. Typically one can just go online and download the needed forms. Another option is to go into the local City Hall and pick them up. After which one can register with the state and receive an Employer Identification Number which functions much as a social security number does for people. Two examples of when an entity would need Federal licensing are if they wanted to sell liquor, as mentioned before, or firearms. There are of course many others; this is just to get an idea of the variety that exists.

The ‘why’ behind the business license is perhaps the most important part of the whole equation. America is lucky enough to function under a government that allows many freedoms to its business owners; however, regulation is still important to keep everything safe and sound. These licenses allow the government to impose protocols which are put in place to protect both the consumer and the provider. Legal protection is provided if a law suit should arise against an establishment which is functioning in full accordance with the law. The same goes to the consumer who may be suing an establishment who is functioning outside of it. Everyone must pay their dues and that includes businesses. Business licenses are a way the government can regulate taxation on all entities conducting business. If one were to evade taxation they would incur fines and could even be forced to close their business. This is why making sure all bureaucratic pathways have been properly followed and all documents correctly filed to ensure that no legal suit will ensue or forced closure based on a lack of legal documentation.

In conclusion, all who aspire to succeed in America as an entrepreneur need to get a business license. While obtrusive at times, laws are put in place for a reason: safety through regulation. Know the business, know the industry, research the legalities then success will be the result.

Disclaimer:

SunDoc Filings is not a law firm.  The materials available at this web site are for informational purposes only and not for the purpose of providing legal advice. You should contact your attorney to obtain advice with respect to any particular issue or problem.