Business Licenses, Permits, & Tax Registrations: An Overview

Before a business can legally start operating, it needs to take care of a number of pesky requirements with governmental agencies. Finding out what you need can be like putting together a jigsaw puzzle without knowing what it should look like.

Nearly all businesses in operation today are required to have one or more licenses, permits, or tax registrations to ensure that they meet government-mandated guidelines for safety, soundness, and tax. Additionally, if you have employees or sell taxable goods or services, you need to register your business with the taxing authorities. These requirements vary by industry and depend on how and where you do business.

Business licenses and permits are issued at all levels of government -- federal, state, and local (county, city, or town). If, for example, you decide to open a restaurant in the city of Atlanta, you will need to obtain all the necessary licenses and permits from the city of Atlanta, the state of Georgia, and the federal government. You will most likely need (among other possibilities) a federal tax ID number from the IRS, a license to sell alcoholic beverages from the state of Georgia, an ID number to collect sales tax and withhold payroll taxes from the state of Georgia, a health permit from the city of Atlanta (to prepare and sell food), as well as a basic business license from the city of Atlanta to operate the restaurant within the city.

There are over 50,000 separate licensing jurisdictions in the United States and each has its own particular licensing requirements.

What Types of Business Licenses, Permits, & Tax Registrations Does a Business Need?

Basic Business Operation License from the city in which your business will operate, or from the local county (if the business will be operated outside of the city's legal boundaries).

Federal Employer Identification Number (EIN), also called a tax identification number (required for almost all types of businesses).

State Identification Number, also called a tax registration number from your state's department of revenue or taxation.

Fictitious Business Name Registration, also called an "FBN" or "DBA" (for "doing business as") registration; required for almost all types of businesses.

Home Occupation Permit. If your business is home-based, many local governments require that you obtain a home occupation permit.

Zoning and Land Use Permits. Local governments’ zoning laws may prohibit certain business activity in designated areas.

Building Permit. If you plan on remodeling or building a commercial space, you'll need to get a building permit.

Health Department Permit, especially if your business involves the preparation and/or sale of food.

Sales Tax License/Sellers Permit for the selling of almost all products and services.

Fire and Police Department Permits, especially for businesses that will attract large numbers of customers (i.e. nightclubs and bars).

Alarm Permits, for businesses having an alarm that is connected to a monitoring service.

Special State-Issued Business Licenses or Permits, if your business will involve the sale of the following types of products:

• Liquor
• Lottery tickets
• Gasoline
• Firearms

Special State-Issued Occupational Licenses, if you will be offering a number of state-regulated services, including:

• Medical care
• Auto repair
• Real estate sales
• Tax services
• Insurance sales
• Cosmetology
• Legal representation (attorneys)
  
  Note: This is in addition to a professional license required for each individual practicing the above.

Which Licenses & Permits do I Need?

• An overview of the licenses, permits, and tax registrations required for your business
• Licensing authority contact information, including name, address, telephone number, etc.
• The actual license, permit, and tax registration applications and associated documents

Get a Business License Compliance Package or try our Form Preparation Service now.

Why Am I Filing for All These Licenses?

The various permit and license requirements for businesses have three main purposes:

• To identify your business and make sure you're accountable for your actions
• To protect the public health and safety, and
• To keep track of your finances for tax purposes.

Pitfalls of Not Being Licensed

With pressure against raising traditional taxes, municipalities are always on the lookout for alternative revenue streams, which means ever increased vigilance for business license evaders. Many even resort to hiring third party collectors. The pitfalls of not being licensed include:

• You cannot open your new location
• You cannot add the item, service, or structure
• Your location will be padlocked
• You may be hit with costly penalties and interest, or even personal liens