"Do I need a business license"

By far our most common question that I get through our chat window on Collective.com, it's past time for an article on the subject on help.collective.com

Business licenses, aka Occupational Licenses, are permits issued by government agencies that allow individuals or companies to conduct business within the government's geographical jurisdiction. It is the authorization to start a business issued by the local government.

For Federal Licenses and Permits, please see this resource from the US Small Business Association.

State licenses and permits

The licenses and permits you need from the state, county, or city will depend on your business activities and business location. Certain Industries and Professions require State licenses; while many counties and cities require small businesses to register to do business in their jurisdiction.

States tend to regulate a broader range of activities than the federal government. For example, business activities that are commonly regulated locally include auctions, construction, and dry cleaning, farming, plumbing, restaurants, retail, and vending machines. Industry licenses aren't common for web-based service businesses.

Professional licenses administered by the State are also required for certain business activities. These licenses typically require education, testing, and continuing education. Common professions requiring licensure are general contracting (construction), real estate sales, insurance, medicine, law, and accounting.

Licenses administered by the city or county governments are more like registrations than a license to do business, such as an industry or professional license. Commonly referred to as Business Licenses or Occupational Licenses, these permits are applied for at your local city or county administration building, depending on where you operate your business, and will expire after a period of time. Typically, a business license will cost less than $100 but vary by state, county, and city.

So do you need a license to do business. Chances are the answer is "Yes".

If not a state industry license or professional license, your county or city almost certainly requires some time of business license or occupational permit.

If you have a web-based business, the chances of your local government finding out aren't very good, but that doesn't mean it isn't required.

You'll have to research your own state, county, and city regulations. Industry requirements often vary by state. Visit your state's website to find out which permits and licenses you to need.

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