Rooting for how to get a business license especially because you are aspiring to become an entrepreneur, it can be difficult to sort out which steps to take to get up and running and staying compliant with confounding government regulations. Depending on the type of business you run, and where, you may need to apply for one or more business licenses.
Business license is a broad term that refers to any kind of license or permit required to operate your business and provide your services in your location. Various types of business licenses are issued by federal, state, county and municipal agencies. It can also be said to be permits issued by government agencies that allow individuals or companies to conduct business within the government’s geographical jurisdiction. It is the authorization to start a business issued by the local government.
A business license’s purpose may be to register your business with the government for tax purposes or to ensure you follow industry regulations. Its other major purposes are that your company’s business activity and physical location are required to operate lawfully. Other determining factors may include the number of employees and the business, such as sole proprietor or corporation. Government agencies can fine or close a business operating without the required business licenses.
So, how to get a business license is not a hard question after all. Here in this article, we have a list of steps to take, follow them and have it placed right in our hands without much sweats:
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Form Your Business Entity
You’ll need a business license in the name of your business. It’s best to establish a business structure and business name before you apply for a business license. That way you don’t have to reapply or amend your business license later. Examples of entity may include the following:
- Sole proprietorship: A one-owner business is considered a sole proprietorship if you don’t file paperwork to establish any other kind of business structure. Sole proprietors are fully responsible for business debts and obligations, and they report business income as self-employment income on their tax returns. If you’re a sole proprietor, your own name is the official name of your business, though you may choose to use a DBA, such as Joe Jones, DBA Affordable Lawn Care.
- General partnership: A general partnership is similar to a sole proprietorship for tax purposes. For liability purposes, partners divvy up liability, and personal assets aren’t separated from the business. General partnerships use the partners’ last names as their official business name, and they may also have a DBA.
- Limited liability company (LLC): A simple business structure where profits and losses are passed through to owners for tax purposes, but personal assets are protected from business liabilities (like debts or lawsuits).
- Corporation: Like an LLC, a corporation protects personal assets from business liabilities. Corporations tend to have a more fixed operating structure and may be better than LLCs for attracting outside investors.
- Nonprofit corporation: A legal entity is organized similar to a corporation, except profits can’t be distributed to owners. Some nonprofits receive tax-exempt status.
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Apply for an Employer Tax Identification Number (TIN)
Depending on how your state processes business licenses, you may need to include your federal TIN on your business license application.
Sole proprietors who don’t have employees can use their Social Security Numbers instead of a TIN, but all other businesses need a federal employer ID number or FEIN. You can obtain an EIN through the IRS online. The process is simple and you’ll receive your number right away.
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Determine Which Licenses You Need
Which types of business licenses you need depends on federal, state and local requirements and what kind of business you run. You can find out which licenses and permits you need through:
- Your state’s Secretary of State office, Department of Revenue or similar agency that issues business licenses.
- Resources available through your local Small Business Administration office.
- Working with a business lawyer to determine and file the necessary licenses and paperwork.
How Long Does it Take to Get a Business License
Several factors can influence how long it will take for you to get your business license, including the type of business you are starting, where your business is located, and state regulations that may apply to your business. Depending on your business, obtaining a business license can take as little as a single day or as long as 6 months.
