Avalara: How do I know if I need a commercial license?

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How do I know if I need a commercial license? Perhaps one of the most frequently asked questions for new entrepreneurs. The most common answer to the question is, you generally need a business license to legally operate any business in the United States. Simple. The answers to the following questions may be less straightforward.

How to obtain a commercial license?

The next question is often How to obtain a commercial license? The answer will depend on your area and state. Individual state and local operating license requirements vary by “how” and “how much” and from industry to industry. Language and definitions may also differ from state to state, so be sure to familiarize yourself with your state’s vocabulary.

Where to start the search for a commercial license?

Okay, so if every state is different, how do you find information for your state and your industry? Online, of course. Most states post specific details about obtaining business licenses on their websites. And some states’ sites are more useful than others. For example, an Internet search for “business licenses in Pennsylvania” will yield a myriad of results, but the Commonwealth of State Department website is almost a one-stop-shop for the registration and licensing processes. business.

Florida, on the other hand, offers you the Department of Business & Professional Regulation. This site will take you to licensing information for a limited number of industries and a link to Open My Florida Business. This page will prompt you to enter your business type in exchange for a brief summary of requirements and links for registration and Employer Identification Number (EIN) applications – which you usually need to complete in no. any state before applying for a license.

Many counties and cities also have their own information portals for business licensing information – and you should definitely survey as many municipalities and counties as possible to determine which ones have licensing requirements.

You can also visit sites such as the US Small Business Administration, Small Business Advice, or Business Licenses. These portals host state and industry specific commercial licensing information and can also provide you with a step-by-step guide to determining which licenses you need and how much.

The internet is a wealth of knowledge, but don’t just rely on what you find there. Not all sites, especially government agencies, keep information up to date. Always register by phone or email with your city clerk for the most recent information on business licenses.

And if your business falls under federal jurisdiction, like alcohol or tobacco, you’ll need to research federal regulations. The US Small Business Administration has a list of business activities with links to the corresponding agencies for more information.

Where can I find licensing information for my industry?

Many of the links provided above and official government sites will have industry specific information or details as part of their tour guide. You can also search for commercial licenses for your specific industry – a search for “commercial cleaning licenses” collects many results, as would a search for almost any other industry. It’s okay to do general research for your industry, but ultimately you should narrow your search to industry-specific information only in your state. Again, each state manages different industries in its own way.

How much does a license cost?

This answer depends so much on location and type of business that it’s hard to find published quotes, but costs range from $ 25 to $ 550 on average. If we look at Florida again, the licensing costs seem to hover around $ 100. Arkansas licenses start at $ 25.

How to transfer a commercial license for a newly purchased company?

Typically, most states do not allow the transfer of business licenses to new owners. While there are exceptions for certain circumstances, more often than not a business will need to reapply for a license.

Put it all together

For the most part, four main factors determine your business licensing requirements. Finer details come into play for each business’s unique circumstances, but the following criteria will help you get started.

4 main criteria that determine your business license requirements:

1. Site – State, county, city and maybe even township

2. Industry – planting and selling broccoli will have different regulations than serving broccoli soup as a lunch menu item

3. Related activities – certain factors may dictate licensing requirements, for example, outdoor seating may require a sidewalk café permit; selling food by weight may require a weights and measures license

4. Company details – how you register your business (SARL, company, etc.); if you have employees (withholding tax); and type of installation (residential or commercial)

Business license requirements vary widely between states, counties, cities, and industries. Be sure to consult your local government entities to be sure you acquire all the licenses necessary to operate legally.

Find out how Avalara can help you obtain the commercial licenses and related information you need.

Cover photo by Canva


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