Compliance with Licensing and Permits
Before your corporation begins any business dealings it is necessary that you apply for and receive the necessary licenses and permits to operate in your industry. Licenses are permits are issued from all levels of government — federal, state, and local. It is important that you become aware of what is required of you before you begin the actual process of operating your business.
A successful entrepreneur regularly complies with all federal, state, and locally mandated licenses and permits. For example, if you open a retail clothing store in Orlando, Florida, you would need to file for federal trade licenses, local certificate of occupancy for your retail store, and state licenses for the individual brands you will be dealing.
When applying for licenses, a good place to start is to ask a local business that already deals in your industry what licenses or permits they needed. Assuming your competitor does not want to sabotage your business right out of the gate, this can be a good place to gain leads. However, beware of “grandfathering.”
“Grandfathering” is a term that refers to new codes that are not enforced because an existing business abides by a superseding, pre-existing “grandfather” code. Regulations for trade change frequently and you need to be made aware of the newest standards for your area and industry.
Thankfully, many lawyer groups will provide a list of the required licenses for your business during the incorporation process. If you are not provided with a list, be sure to ask. If your lawyer does not yet have one, they will have resources available that can educate you just as well. If you are ever unsure, ask. It is better to be curious than to make easily avoided mistakes.
Though not a comprehensive list, here are some of the more popular licenses and permits a business may apply for:
- Business License. A business license is a pretty straight forward concept. This license allows your business to conduct, well, business. If the business is located within an incorporated cities boundaries the business is required by law to acquire a license to operate business within that city. If the property at which the business will be conducted lies outside of any incorporated city, the license to operate must be acquired from the county.
- Property Use Permits. If your business involves manufacturing, or if your primary business is conducted out of your home, your city or state may require you to apply for a Property Use Permit. This permit allows you to use a facility within city bounds for manufacturing, or it allows you to use your residential home as your primary commercial space as well.
- Professional Licenses. If your business operates in a specialized profession such as law, medicine, or psychology, you will be required to acquire the appropriate licensure to operate in your field.
- Employer Identification Number (EIN). Most business are required to obtain an Employer Identification Number. In certain areas this is referred to as a Tax Identification Number. This may be acquired from the IRS. Your lawyer may provide you with the opportunity to submit for this shortly after incorporation has occurred.
- Sales Tax Licenses and Tax Numbers. If you are selling retail in a state that collects a retail tax, you will need to apply for both your tax number as well as your license to collect tax.
In addition to these exists a great variety of local, state, and federal licenses and permits you may need to obtain. It is wise to contact a business law professional to make sure that you are properly complying with all of your licensing and permits.