About Business Licenses

If you are opening a new business or changing locations of your current business, you will need to apply for a business license. Business licenses serve as the official legal registration documents for your business or company, and ensure that you are legally conducting business in your city, county and state.

Significance

A business license is a legal document required for business operations. Whether you're business owner of a large company or an independent entrepreneur, you may need to obtain a business license from the state or municipality that the business will be operating in. Applying for a business license is a simple process, and you may need to obtain multiple licenses on both the city and state levels of your respective business location.

Function

A business license is an indication that a state or municipal board has approved the business to conduct sales and operations in a given territory. Most states require a special license or permit for operations such as serving food and alcohol, and for providing professional services such as legal counsel or psychiatric services. However, business licenses are not required for some types of business operations such as web consulting, design work or typing services. Business licenses need to be renewed each year, and the renewal fees are typically lower than the cost of initial registration.

Types

There are several types of business licenses available and the filing fees and application process may vary for each type. Almost all types of businesses need to obtain business licenses from the county or city, while a state business license is necessary for specialized services provided by Realtors, private investigators, doctors, hairdressers and building contractors. Other types of business licenses include Sales Tax Licenses and Federal Licenses.

Considerations

If you do not acquire a business license or permit, you may be liable for paying a large fee and can even put your business at risk for closure because you are operating a business illegally. Business licensing laws vary by state and district, so a business owner will need to check with the area courthouse to make sure all applications for licenses and permits have been completed. Small businesses such as web designing, digital services and general consulting work typically do not require a business license and can proceed with business operations without the formal registration process.

Benefits

Business licenses protect you from paying fines and fees for illegal business activity in your area. A business license also serves as official registration of your business, ensuring that your business and company name are validated at the county and state level. Business licenses can be applied for and registered online, or offline through the mail and are fairly inexpensive; the average cost of a business license in most U.S. cities ranges from $30 to $150.