Can People Have a Business Without a Business License?

Businesspeople who engage in intrastate or interstate commerce need specific licenses.

You can't legally own a business in the United States without a business license, according to the U.S. Small Business Administration. The business license is sometimes referred to as a business permit, certificate of registration or business registration, and the requirements vary from state to state. Government agencies require business owners to obtain business licenses to promote public safety and ensure tax compliance.

Geographical Jurisdiction

Government agencies issue business licenses to people who want to operate businesses within particular geographical jurisdictions. The government tracks these businesses and holds the owners accountable for their activities. Failure to obtain the proper license can result in legal problems, expensive penalties or costly interruptions.

Multiple Licenses

Some businesses are required to obtain multiple licenses. For example, a person who opens a hair salon needs a state, cosmetology and sales tax license. A businessperson selling firearms needs a federal license, a certificate of compliance, a permit as well as the sales tax license. A plumber is required to have a local license and a sales tax license. Requirements vary according to the business structure, professional service and the location.

Home Occupational Licenses

Business owners and professionals who conduct business from the home may be required to obtain home occupational licenses, which are issued by the county government. Examples of businesses that are required to obtain home occupational licenses are tutors, lawyers and accountants. Home occupational licenses are not to be confused with occupational or professional licenses, which lawyers and accountants also must have.

Zoning and Land Use Permits

Businesspeople have to follow government zoning laws, which limit the number and types of buildings and their uses in certain areas. These laws may also prohibit people from parking commercial vehicles in residential areas, and limit the number of vehicles they can park in their neighborhoods and the number of visitors to their homes. In addition, homeowners associations may have rules that prohibit businesspeople from conducting business at home. Obtaining a variance or special use permit assures a businessperson that neither the association nor the government can shut down his businesses for noncompliance.

State-to-State Requirements

The business license is a legal document. There are more than 70,000 licensing agencies in the United States and just as many licensing requirements. It is the business owners' responsibility to determine the licensing requirements in their states and comply to avoid legal action against them. The U.S. Small Business Administration lists the licensing requirements for each state on its website.

References

• U.S. Small Business Administration: Obtaining Business Licenses and Permits
• Business Licenses: All About Business Licensing

Resources

• New York State Online Permit Assistance and Licensing
• Business.gov: Business Licenses and Permits