Does a Home Business Need a License?
It's fairly simple to set up and run a home business. For instance, you can establish a website and start selling hand-made items online. You can also start a small web design business from home. But you may wonder if you need to take certain steps to make the home-based company official, such as securing a business license.
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What Is a License?
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In some cases, a company needs a license to conduct business legally in the town or state in which it operates. The license provides specific permissions to the company owner regarding his business activities. State and local government officials need to ensure that the business is up to code and have protections in place to guard the public in case of issues. For instance, a restaurant owner needs to meet health codes and follow food safety guidelines in order to secure and keep its business license.
Home Businesses
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A business license is most common for a company that must interact with customers on a regular basis. For instance, a representative of a plumbing business must visit client homes and an insurance office that accepts clients and manages individual client insurance policies, so they commonly need a license to operate. So, if you run a home business that accepts clients or sells products and services that can pose a risk to consumers, you may need a business license. If you run a home business, like a web design or data entry company, that doesn't require much, if any, interaction with customers, it's less likely that you'll need a license for operations.
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Figuring Out If You Need One
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Regardless of the type of home business you run, it's still important to check to see if you need a business license. If you're still unsure, one quick way to figure out what's required is to run a check on Business.gov's License and Permit online tool. Enter the city, state and type of business you own. You can also simply call your state's licensing board or commerce department to ask a representative.
Applying for a License
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If you do need a license for your home business, the process of applying can take weeks, months or even years in some cases, so it's important to get started as soon as possible. You may have to take training classes, exams and secure insurance to qualify for the license. You must submit your application along with copies of your state business registration paperwork, employer identification number and the applicable fees to start the process.
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