This week in business basics, we chose to look at a topic that has regularly confused some of our customers – business licenses. Business licensing can be a bit of a tricky topic because, quite honestly, there is no one answer for most of the questions asked about licensing. But we can try and help give a broad overview so that our readers understand what a business license actually is, and what it allows you to do.

Getting a business license is not like getting, say, a driver’s license, where all anyone has to do is pass a couple of tests and get a piece of plastic that qualifies them to drive any personal car. Business licenses are essentially permits to operate a business in your state, city, and industry – whether you actually need one depends on the legal regulations those three groups are bound by, and enforce.

If you, for example, run a computer repair business out of your garage in LA county, your business needs to apply to the Bureau of Electronics and Appliance Repair for an electronics repair license. This would, of course, be on top of the standard business license that most states and cities typically require.

But as we said, every business, industry, state, and even city has a different set of regulations in place. We recommend that, before you begin to try and dig through your state’s website for the necessary forms, you check out the US Small Business Administration website and use their tool to determine what licenses and permits you will need to apply for.

However, we can help point you in the right direction in terms of legal compliance. Nearly every locality requires businesses to have an Employer Identification Number, a Doing Business As name (if business is done using any other name but the owner’s), OSHA certification, and a Sales & Use Permit. All of these allow the state and city governments to keep track of your business, enforce relevant laws, and collect taxes.

It is VITALLY important that you comply with your local laws and regulations – operating without the necessary licenses or permits is a quick way to get fined and/or have your business shut down. Even if you think you couldn’t possibly be in an industry that requires any sort of license or permit, check with your state and local government and use every available tool that you can to ensure compliance with the law.

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