Do I Need a Business Plan to Apply for a Business License?
Starting a business requires a lot of paperwork: federal filing, state filing, local licenses, bank account setup, business cases, business plans, job descriptions -- the list can seem endless. Worse still, the way this paperwork interacts can make the whole process reminiscent of the child's song "There's a Hole in the Bucket." It seems every document requires some other document to be completed first. Business licenses are rarely an exception.
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Purpose of a Business License
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A business license, writes Eric Tyson in "Small Business for Dummies," is a document required by local government -- usually at the city or county level. Its purpose is to allow local government to collect taxes and keep track of the businesses operating within its borders. In many municipalities, the process of getting a business license also serves to enforce zoning ordinances. A city would not, for example, approve a license application for a topless bar to open next door to an elementary school.
Purpose of a Business Plan
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A business plan is a strategic document for a new or existing business. It documents the current state of the business, its general business model and tactics for making a profit under existing conditions. A business plan can be scrawled on the back of a napkin, or a professionally prepared multimedia presentation. Business plans are used by company leadership to guide decisions, and often presented to potential investors to help them decide whether or not to get involved.
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Getting a Business License
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In most cities, applying for a business license requires somebody to fill out an application, including the address and general industry of the business in question. In the case of a corporation, the license may also ask for registration information on the corporate structure. Some municipalities also ask about number of anticipated employees and have special processes for potentially hazardous waste. Business plans are not normally part of the application process.
A Requirement?
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In a word, no. Your local business office will not require you to present your business plan when you apply for a business license. However, business experts including Eric Tyson and consulting giant Michael Gerber advise that the more you plan before you start the business, the more likely your business is to succeed. Put another way, you don't need to have one to get a business license -- but it's a good idea to have one before progressing that far.
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References
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