Business Licenses and Their Importance
All businesses should make a point of staying compliant with all city, state, and federal laws. This will keep the company out of court fighting civil lawsuits and avoiding fines levied against them. Depending on the type of business you are running, you may need permits and licenses from the city or township, the state, and or the federal government.
Licenses From Several Government Entities
In some circumstances, you will be required to obtain some type of written approval from the city, state, and federal government. Owning a restaurant or bar is one such business. It gets even more cumbersome if you sell liquor. To prepare and sell food, you will need a city license, a state license, and a federal license. You will also need two licenses: a business license to operate a bar and a license to sell alcohol. And let’s not forget your federal tax I.D. number that you will also need to obtain.
Penalties From Not Having Proper Licenses
If you fail to obtain any one of these before operating a functioning restaurant, you could suffer greatly. You’ll face fines, penalties, and business closure, in addition being unlicensed could open you up to civil lawsuits from unhappy customers. This may delay an actual application for a business license or result in a denial of the license.
The Major Costs From Not Following the Law
Insider trading can be legal, but the transactions must be registered with the SEC, such as FB insider trading. As your business grows, you cannot allow your vigilance to lapse. At all times you should be aware of the laws governing the type of industry you are in and adhere to them religiously. This is especially true with stock market laws.
People guilty of insider trading will face serious penalties, even jail time. The average inside trader spends 18 months to three years in jail when convicted of the crime. In 2004, Martha Stewart, a well-known celebrity, spent five months in jail for her financial crimes which included insider trading. Knowing the law was essential in this case because Martha Stewart divulged information that was not widely available to other traders, thus committed insider trading, a federal offense.
Service Businesses That Require Licensing
Certain specialties such as plumbing require general contractors to register and obtain a state license to work. Even running a laundromat requires a retail business license and you would need an industrial laundry license if you did laundry for commercial businesses such as hotels and restaurants.
The Five Types of Licenses You Are Likely to Need As a Business Owner
Currently, barbers, cosmetologists, and hairstylists must have a license to do business. These businesses can be operated from a commercial building or from inside the home. Some other home-based businesses that require licenses are daycares and financial services or tax preparation.
- Professional Licenses: barbers, hairstylists, financial services, daycares, and legal services
- Health and Safety Permits: daycares and restaurants need permits from the fire department, from the health department, and environmental services
- General Business License: for any business that operates within a municipality or county and collects revenues. This license is considered a business tax certificate as well as a reseller’s certificate. By obtaining this license you are also ensuring that you follow your local zoning laws
- Business owners sign permit: dictates the size, shape, type, location, and whether the sign can be lighted. This advertisement is often regulated by local ordinances. In residential communities, restrictions can be quite limiting for signage.
- Sales Tax Licensing: attached to a general business license, but in some states it is separate.
Maintaining Your Business Licensing
Staying within the laws of business after you become licensed ensures you remain in good standing with the governmental powers that allow you to conduct a business. Choosing to defy any of the laws associated with your business could lead to forfeiture of your licenses, fines, censure, or conviction and incarceration. In addition to operating within the law, business owners must keep their licenses current. This might require taking a continuing education course or paying a renewal fee for licensing.
Steps to Renewing a Business License
- Provide your business name, business address, and business license/account number
- Provide your current year notarized affidavit
- Provide a current driver’s license or passport with a photo ID
- You’ll also need to know your prior year’s gross revenue and the number of employees you employ full and part-time
- File your business tax return and pay all the necessary fees
- Make a payment for the license renewal
Perform all these tasks and within minutes, the renewal takes effect as long as you have not allowed your license to expire.