Basic Requirements to Obtain Business License in the U.S

There were 32.5 million registered small businesses, accounting for 46.8% of the private workforce in the United States, according to the data released by the Small Business Administration (SBA) in 2021.

That number shows how business registration is significant to millions of entrepreneurs in the U.S because they know the benefits that come with it. Expectedly, most businesses require licenses and permits.

For instance, a beautician who wants to establish a waxing salon may have to obtain either esthetician license, waxing license, or cosmetology license, it may be called different names in the states.

Every new business is required to get a business license before it can operate legally in the United States.

Depending on the area the business is running from (as well as the type of business it is), there are other kinds of licenses and permits the businesses must acquire.

However, there is always the basic license that every registered business whether home-based business or not must get in certain business activities e.g aviation, maritime transportation, radio and television broadcasting among others.

As such, there are 11 basic licenses and permits that are issued by the agencies of the federal government even as they satisfactorily meet the registration requirements for their venture.

It is also necessary to clarify now that the process of getting a business license differs by state, although some have similar requirements.

If you intend to run your enterprise across various states, then it is important to know the peculiarities of the demands of particular states.

Where Can I Get a Business License in the U.S?

There is no straightforward answer to where to get a business license since this is solely dependent on where you plan to locate your business because there are thousands of licensing jurisdictions in different parts of the country.

The first thing however is to get local business licenses, and you have to visit your local government to get this sorted.

Level of business licenses

There are levels of business licenses and permits in the U.S.  At the local level, you will most likely have to engage the officials at the clerk’s office and get your general business licenses done here.

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You can always go through various resources online that are dedicated to giving whole information on stuff revolving around the local business license.

However, wisdom demands that you always double-check with your local government (both the website and the office) to be sure that everything you come across is up to date.

For states, you should employ all that has been said about getting your local-level business license as well. So, you should reach out to your state government, and the officers there will be glad to help you.

You can additionally visit the relevant state agency’s website and look for the part of the business license. Specifically, U.S Business Administration (SBA) is a good place to start.

If you are not sure of where to get started, you can then reach out to the administrators through email or phone.

Requirements for Business License Application

While this varies (depending on where you are making your application), there are certain general things you should be asked. These includes:

Business Name:

Before you can get a license for your business in the U.S, you must have an acceptable business name. Your company’s name is what it will be generally known as (its identity).

Therefore, it is required that any serious business should have a peculiar name. It could be your legal name or a unique name associated with the business or service you render.

It is also advisable that your business name should be distinct, in the sense that it should be peculiar to just your brand.

You should be aware that if you should go for a similar name with a famous brand, your license may be shaky since you will likely have issues with the authorities.

As much as possible, make your business name brief and easy to remember. Also ensure your business name is not controversial, hence, you may have issues getting your licenses.

Contact information:

You can be sure that it doesn’t matter the jurisdiction you are opting for, the officers will ask for your contact details. Therefore, you should have something very professional in place before visiting.

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If you can, get a custom email address for your company, and make use of what you have access to if you are to be reached for whatever reason.

It is always advisable to separate yourself from your business. This includes having your company’s contact details to be different from your personal details. It is one of the business strategies that will enhance your business’s trustworthiness.

Business location (or locations):

It is only normal for the authorities to want to know where your business is located. Even if you have an online business, there should be a physical point where the operators can be traced to.

It is okay if you are using your residential place for instance as your business location. If your business has more than one location, you should include every one of them.

Business activity

Additionally, you have to be concise with the type of business you are operating while making an application for your business license.

It should be noted that the officials won’t grant a license to an illegal business enterprise. If you are not able to convince them that the company is not contradictory to the laid down protocols of the state, then you won’t be given a go-ahead.

Importantly, your business activity will determine if you need to obtain a federal license and permits or not. For instance, if you want to set up an airline company in any jurisdiction, you will need a federal permit in addition to a state license.

Your federal and/or state tax ID number

Finally, you have to submit your tax ID number before you can receive the green light from authorities to run a legal business as stamped by the U.S government.

You should be aware that you have to pay a small application fee when making submissions for your business license. This also varies by jurisdiction.

However, this is one of the business startup costs you should have in mind already, and it shouldn’t be much of an issue.

Aside from the general go-ahead from the local and state government, it is also necessary to clarify that depending on the type of business you do, you may need to acquire other specific licenses.

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Therefore, you should be familiar with all you need to operate legally.

Different business types have different required licenses everywhere.

While there are businesses that only need approval from the local government, certain types must get an official nod from the federal government.

For instance, if you are into agricultural businesses, or you are doing something else where you must place ammunition in your workplace, then you must have backing from the federal level.

Duration of obtaining a business license in the U.S

The major efforts here revolve around submitting your business license applications to the right authorities as well as paying the necessary fees.

When you have done all of these, you must wait for some time before your license will be ready. But how long are you to wait?

The duration is dependent primarily on your location. For instance, you can get approval for your business license within 45 days in the State of California if you plan to invest in the Golden State.

Once you have your business license, it is important to take note of the expiration date. You should be aware already that these licenses are only effective for a set period that is determined by the government.

Nevertheless, you are always permitted to submit your license renewal paperwork as well as the necessary filing fee before it will get expired.

To avoid issues, try to do this on time. If your license is getting expired in December for instance, you may have to start the renewal paperwork early in November.

Wrapping up

If you are planning to launch a business in the U.S, you should brace up to put in a lot of effort to get your business license in your city.

The kind of business you plan to launch determines if you would need to obtain a federal license. Above all, you should give it all it takes to operate legally to avoid lawsuits from the authorities.

Reference:

Office of Advocacy (Aug 31, 2021). “Advocacy Releases 2021 Small Business Profiles for the States”. sba.gov

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