Do you have a business idea but are unsure if it’s possible to get started? Many things can hold someone back from starting their own business. One of the most common is not knowing if they will get the necessary licenses and permits. To answer this question, we spoke with an expert in the field who has helped hundreds of businesses start up across the USA.
Depending on what type of license or permit you need, it takes anywhere between 1 day and 3 months to start your own business. This article will discuss the process to get a business license and what documentation is required.
The Basics Of Business License Requirements
When starting a business, there are certain things that you need to do and obtain before really getting into the swing of things. One such thing is obtaining your license or permit from the proper agency, allowing you to legally operate as a corporation in whatever state you’ve chosen for your company’s headquarters.
This process can take some time depending on where you live, but typically speaking, once all of this has been taken care of, then it’s smooth sailing from here on out. Let’s look at how long each type of license takes because we want everything done quickly so we can get our new venture off its feet and make sure those dollar signs start flying around like madmen.
Types of Business Licenses
There are three types of business licenses that you will need to obtain for your company to operate legally. These include:
A Federal Tax ID (EIN)
A Federal Tax ID (EIN) is required by all businesses and can typically be done online via the IRS website or through a third party like LegalZoom or Incfile. All of these options require some form of payment, but they make it quick, easy, and painless, which is what we want when starting our new venture.
You only need an EIN if the company has employees (which most companies do). If there are no employees, you don’t technically need one, but having one makes things run more smoothly on tax day, so get it anyway. The filing fee for obtaining an EIN is $100, and it can be done in as little as 24 hours.
A Business License
This document will vary depending on where your business is located, but all states require you to have one, so don’t worry if you forget. Suppose the state that your company operates out of has a department or agency which deals with commerce. In that case, they should help direct you towards what sorts of licenses and permits are required for whatever type of business entity (LLC, C-Corp, Sole Proprietor) you choose.
The filing fee typically ranges from free up to hundreds of dollars depending on what type of license/permit we’re talking about here; also, keep in mind each city may require you to get a separate license for your business.
Other Permits And Licenses
Some states also require you to have other permits and licenses to operate legally, such as an Excise Tax License, Transient Vendor’s License, or Sales Tax Certificate, just to name a few. You can easily research what is required by checking with the state government website where your company resides.
This process will usually take several days to several weeks because each state has different requirements, so there is no real answer on how long this could potentially be.
Other Things To Consider When Getting Your Business License
This is something that I didn’t even think about when starting my company. It wasn’t until the owner of a new restaurant down the street remarked to me how long it took him to get his license and permits in order. He had spent over $500 on separate licenses, fees, and taxes before ever opening up shop, so this was all money coming out of his pocket with nothing to show for it except some useless pieces of paper which allowed him to run an illegal business?
That’s not exactly what we want now, does it?
The point here is that there are plenty of things that you need to take into consideration other than just filling out paperwork like getting insurance (which most states require), paying your state income taxes, and getting a Federal Tax ID. This all takes time, so be aware of it before you start your own company.
Business License Forms
Here are a few different forms that you may need to fill out when going about getting your business license:
Business Licensing Form –
This form is the most common, and the process for filling it out will vary depending on where your business is located. You can find a blank example of one online just by doing some quick research, but again, each state has its own requirements, so don’t expect them all to be exactly alike.
In my case, we had several pages worth of information that needed to be filled out, but then again, our licensing fees were $450 bucks or something ridiculous like that? However, the point was not necessarily how much time it took us (which could have been less than an hour) but what was involved in the process.
Business License Application –
This is probably another form that you’ll need to fill out. Still, it will be different depending on the type of business entity you decide upon (there are several types). Once again, do some quick research online and check with your local government website for more details if needed.
A few suggestions would be to talk things over with an accountant or lawyer before getting started, so they can help guide you through the licensing/permit maze; also, make sure someone within your company fills these forms out as opposed to doing them yourself because mistakes could cost valuable time here. You want all paperwork filed correctly from day one, or problems may arise later down the road when dealing with taxes.