Business Licenses and Permits Your New Startup May Need

Opening a new business is exciting, but it's essential to have all your bases covered. One crucial step is obtaining the necessary licenses and permits. License and permit are usually used interchangeably, but there are a few minor differences. Permits are typically restrictive or temporary, while licenses are more frequently permanent. Permits usually require occasional inspection and safety standards.

Business licenses are an unavoidable part of starting a business. Whether you are starting a cafe, a clothing store, a bill collector, or a butcher, you must obtain the required business licensing to operate your business legally. A business license indicates that the business owner has legally registered the company to a clientele. A license means that the business owner knows all local, state, and federal regulations for the new business and is willing to comply with the laws.

Depending on the type of business you're starting, you may need one or more of the following:

Business License

This is the most basic license you'll need for your new business. Your local city or county government typically issues it, and it gives you the right to operate your business within the designated area. Before you can be issued a business license, you'll usually need to prove that your business is registered with the state.

Zoning permit

This permit is necessary if you plan to open a brick-and-mortar location for your business. It ensures that your business complies with the local zoning regulations and that it won't negatively impact the surrounding community.

Building permit

Suppose you're making any changes to the physical structure of your business location, such as renovating an existing space or building a new one. In that case, you'll need to obtain a building permit. The local city or county government generally gives this permit.

Health permit

If your business is handling food or other substances that could pose a health risk, you'll need to obtain a health permit. Your state or local health department typically issues this permit.

Liquor license

If your business is selling alcohol, you'll need to obtain a liquor license. The requirements for this license vary from state to state, so it's essential to check with your local alcohol authority to see what's required.

Fire permit

If your startup uses any type of open flame, such as a barbecue grill or candle, you'll need to obtain a fire permit. An authorized local fire department usually gives out this critical permit.

Sign permit

If you're planning on putting up any sign for your business, you'll need to obtain a sign permit. The requirements for this permit vary depending on the size and location of the sign, so it's important to check with your local government before you begin any work.

What will happen if you don't acquire all the licenses for your business?

After all the time, money, and effort you've applied into opening your new business, you don't want to risk its existence or your funds on noncompliance. If you don't have all the necessary business licenses, you could face a bunch of consequences that may include:

• Expensive fines and personal liens
• Insurance coverage lapses, cancellations, and increased liability exposure
• Profit loss due to suspension or closure of the location
• Inability to raise money, sell shares, or pass due diligence
• Voided customer contracts
• Time lost due to repeat inspections
• Failure to open new locations or release new products

Obtaining the necessary licenses and permits for your new business can seem daunting, but it's important to make sure you have all your bases covered. By following the steps above, you can ensure that your business complies with applicable regulations.