Business License
|
Business licenses, permits and registrations are a necessary requirement for a business to operate. Business licensing fulfills several functions in our society. As a general rule, business licensing is part of its compliance and accountability to its stakeholders which can include local, country, state and federal government as well as customers and vendors. Depending on the business location, the necessary licensing process can be complicated and costly, fraught with liability exposure for the business owner. On top of that, it may not be easy for the new business to find out about all of the licenses, permits and registrations it needs just to open its door and to keep its door open. The licenses, permits, registrations vary by location of the business including where its product are produced and sold and by the business' industry. Apply Online: Get Business Licenses |
|
Why Business Licenses are Important
For compliance purposes: business licenses, permits and registrations serve the purpose of advising the licensing authorities that the business is functioning and meeting safety, soundness and tax regulations for the authorities. This is especially important if the business has employees or sells taxable goods and services. This means the business intends to comply with governing laws and regulations and intends to report to the authorities, the information the authorities require for the business to operate. An example is that a business generally needs to procure a federal tax identification number so the Internal Revenue Service can collect taxes on the profits of the business. Failure to do so can have far-reaching civil and criminal penalties for the business and its owners significantly impacting the corporate liability protection for the owners. Another example is that most local governments require a business to procure a business license in order to open their operation. Failure to do so means that the business will not be allowed to operate which also can significantly impact the profits and corporate liability protection for the owners.
- If, for example, a when a restaurant in Colorado Springs opens it needs obtain the necessary licenses and permits from the city, the county, the State of Colorado, and the federal government. The city will probably insist on a basic business license and may be the licensing authority to issue a health permit and a license to sell alcoholic beverages. However, in some states, the state or county authority may be the authority to issue these permits and licenses. The restaurant will need to register with the State of Colorado so it can collect sales tax receipts and withheld payroll taxes. The restaurant will need to register with the Internal Revenue Service so it can also collect different taxes including withheld federal and social security taxes and federal unemployment taxes.
- For accountability purposes: the business licenses, permits, and registrations can assure customers and vendors that it is capable of providing the service or product they are expecting.
- For a customer, an example is a patient would be interested in going to a physician licensed to practice medicine. In many cases, not only does a doctor have a personal professional license, but his practice may be part of a medical institution required to obtain a state issued occupational license for the practice.
- For a vendor, most local, county, and state governments offer lists of business licenses, permits and registrations. Vendors can obtain these lists and contact the business to sell their product or service, helping the business to succeed.
