When
you're embroiled in the excitement of starting a new business,
it's easy to ignore the need for licenses and permits. Sure,
getting licenses and permits is about as fun as visiting
the dentist. But failing to do so-and doing it right from
the beginning-is one of the most common mistakes new entrepreneurs
make.
Following
are some of the most common licenses and permits homebased
small-business owners may need and where to go for more
information.
Business
License
Contact your city's business license department to find
out about getting a business license, which essentially
grants you the right (after you pay a fee, of course) to
operate a business in that city. When you file your license
application, the city planning or zoning department will
check to make sure your area is zoned for the purpose you
want to use it for and that there are enough parking spaces
to meet the codes.
You
can't operate in an area that is not zoned for your type
of business unless you first get a variance or conditional-use
permit. To get a variance, you'll need to present your case
before your city's planning commission. In many cases, variances
are quite easy to get, as long as you can show that your
business won't disrupt the character of the neighborhood
where you plan to locate.
Because
you're planning to start a business in your home, you should
investigate zoning ordinances especially carefully. Residential
neighborhoods tend to have strict zoning regulations preventing
business use of the home. Even so, it's possible to get
a variance or conditional-use permit; and in many areas,
attitudes toward homebased businesses are becoming more
supportive, making it easier to obtain a variance. Visit
the Zoning section of this article for more information.
Fire
Department Permit
You may need to get a permit from your fire department if
your business uses any flammable materials or if your premises
will be open to the public. In some cities, you have to
get this permit before you open for business. Other areas
don't require permits but simply schedule periodic inspections
of your business to see if you meet fire safety regulations.
If you don't, they'll issue a citation. Businesses such
as restaurants, retirement homes, day-care centers and anywhere
else that lots of people congregate are subject to especially
close and frequent scrutiny by the fire department.
Air
and Water Pollution Control Permit
Many cities now have departments that work to control air
and water pollution. If you burn any materials, discharge
anything into the sewers or waterways, or use products that
produce gas (such as paint sprayers), you may have to get
a special permit from this department in your city or county.
Environmental protection regulations may also require you
to get approval before doing any construction or beginning
operation. Check with your state environmental protection
agency regarding federal or state regulations that may apply
to your business.
Sign
Permit
Some cities and suburbs have sign ordinances that restrict
the size, location and sometimes the lighting and type of
sign you can use outside your business. To avoid costly
mistakes, check regulations and secure the written approval
of your landlord (if you rent a house or apartment) before
you go to the expense of having a sign designed and installed.
County
Permits
County governments often require essentially the same types
of permits and licenses as cities. If your business is outside
any city or town's jurisdiction, these permits apply to
you. The good news: County regulations are usually not as
strict as those of adjoining cities.
State
Licenses
In many states, people in certain occupations must have
licenses or occupational permits. Often, they have to pass
state examinations before they can get these permits and
conduct business. States usually require licensing for auto
mechanics, plumbers, electricians, building contractors,
collection agents, insurance agents, real estate brokers,
repossessors, and anyone who provides personal services
(i.e., barbers, cosmetologists, doctors and nurses). Contact
your state government offices to get a complete list of
occupations that require licensing.
Federal
Licenses
In most cases, you won't have to worry about this. However,
a few types of businesses do require federal licensing,
including meat processors, radio and TV stations, and investment
advisory services. The Federal Trade Commission can tell
you if your business requires a federal license.
Sales
Tax License
There are two reasons you need a certificate of resale (in
other states, this may be called a "seller's permit"
or a "certificate of authority"). First, any homebased
business selling taxable goods and services must pay sales
taxes on what it sells. The definition of a taxable service
varies from state to state. Depending on individual state
rulings, both the parts and labor portions of your bill
may be taxable.
Sales
taxes vary by state and are imposed at the retail level.
It's important to know the rules in the states and localities
where you operate your business because if you're a retailer,
you must collect state sales tax on each sale you make.
Before
you open your doors, be sure to register to collect sales
tax by applying for each separate place of business you
have in the state. A license or permit is important because
in some states it's a criminal offense to undertake sales
without one.
Health
Department Permits
If you plan to sell food, either directly to customers as
in a restaurant or as a wholesaler to other retailers, you'll
need a county health department permit. This costs about
$25 and varies depending on the size of the business and
the amount and type of equipment you have. The health department
will want to inspect your facilities before issuing the
permit.
Source:
Start Your Own Business, Entrepreneur magazine & Biz
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