How to Obtain a Business Permit

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Whether you're launching a home-based business small business, a clothing store or a medical office, you may need certain permits and licenses. The exact requirements depend on the state, county or city in which you operate. Generally, it's recommended to apply for a business permit as soon as you register your company with the state and obtain a tax ID number.

While not all businesses require a permit, you should check beforehand and take the steps needed to comply with the law. Certain types of businesses, business activities and business locations are more prone to need a permit than others, but it will all depend on where you conduct business.

What Is a Business Permit?

One of the first steps to starting a business is to obtain the necessary licenses and permits. Each state, city and county has its own permit requirements. These depend on your location and what products or services you offer.

For example, if you open a pub in Orlando, you may need business licenses and permits from the city of Orlando, the state of Florida and the U.S. government. This kind of business typically requires several permits, including health permits, building or zoning permits, signage permits and permits from the local fire department.

To put it simply, a business permit is a document issued by state and local government agencies. A bar or restaurant that sells alcoholic beverages in Connecticut, for instance, may need to apply for a liquor permit or an out-of-state shipper's permit (if it sells products online or delivers them across the border). A company that produces its own beer, cider or wine will require different permits. These documents can be obtained from the state's department of consumer protection. Check with the county clerk, city hall or city clerk, the chamber of commerce and municipal codes to see if you need a local business license or permit.

Several other government agencies may issue business permits. The Animal and Plant Health Inspection Service, a division of the U.S. Department of Agriculture, requires business owners who import, export or transport animals, plants, soil, pests and animal products to apply for a permit. If you operate an oversize or overweight vehicle for business purposes, such as trucks and vans, you may need a permit from your state's department of transportation.

Business Permits vs. Business Licenses

The terms business license and business permit are often used interchangeably, but they mean different things. After you register your company with the state and get a tax ID number, you may need to apply for a license. This document grants you the right to open and run your business or practice your profession in a particular city or state.

Depending on what services you offer, you may need a business license, an occupational license or both. A massage therapist or a real estate agent, for instance, cannot practice his profession without a license. If he decides to start a business, he needs to make sure his staff is fully licensed.

Licenses are more general than permits. They are typically required for businesses that offer specialized products or services, such as tobacco or alcoholic beverages. A permit, on the other hand, is typically issued for safety purposes — think of food-handling permits or liquor permits.

Restaurant owners, for example, may need a license to sell wine and liquor, but they cannot open their doors to the public without having a permit from the local health department. Therefore, both types of documents are equally important and may need to be renewed every few years.

Examples of Business Permits

Some industries, including but not limited to agriculture, education, gaming, health care and financial services, are more highly regulated than others. Failure to obtain the necessary licenses and permits may lead to fines and penalties. In the worst-case scenario, authorities could shut down your operations. Also, be aware that you may need new licenses and permits when you open offices in another state or expand your services.

Permit requirements depend on your location and the nature of your business. For example, a building permit may be needed if you build your office from scratch, renovate an existing office or install new utilities. This ensures that what you are building complies with the local government regulations and safety codes.

Most businesses that serve the public also need permits from the local fire department. Gym centers, day care centers, restaurants and hotels are just a few to mention. If you run a home-based business and customers come to your place, you may need to obtain health and safety permits. Any company that puts out a sign to advertise products or display its name and contact information may need a signage permit depending on the local regulations.

Obtaining a Sales Tax Permit

Try to find out whether or not you need a sales tax permit, or a seller's permit, for your new business. Most states require either a sales tax license or permit and, in some jurisdictions, running a business without one is a criminal violation. The only states without a sales tax are Alaska, Montana, Oregon, New Hampshire and Delaware. This permit allows you to collect sales tax on the goods you sell.

As you would expect, each state has different rules for obtaining a sales tax permit. Texas, for instance, issues sales and use tax permits to individuals or companies that offer taxable services or sell, lease or rent personal properties. This service is free of charge, but you may need to post a security bond.

If you operate your business in California, you may apply for a seller's permit online or contact the California Department of Tax and Fee Administration. This document is required for those who either do business in the state or intend to sell or lease tangible personal properties. If you have several locations across the state, you may need a separate permit for each. Obtaining one is free, but it might be necessary to pay a security deposit.

Applying for Other Business Permits

The application process depends on the type of permit. For example, if you want to open a restaurant in the county of Los Angeles, California, you will need a food facility permit. Follow these steps to obtain it:

  • Reach out to the local planning/building department for permission to build a restaurant at your preferred location.

  • Create detailed floor plans using the retail construction guide available on the Environmental Health website.

  • Send your floor plans for approval to the EH as well as to the local building and safety office.

  • Once the construction is completed, call the local building and safety office for inspection.

  • If your project is approved, contact the EH for a final inspection.

Some permits are a lot easier to obtain, though. If you need a signage permit, you can simply fill out an online form (if your state offers this option) and wait for approval. What you should know is that most types of permits require an inspection before being granted. Health and fire-safety inspections are extremely common.

If you're planning to start a home-based business, you may need a home-occupation permit. The City of Portland, Oregon, for instance, requires business owners who use their home as a place of work and receive customers or employees on their premises to obtain this permit. If you work from home but don't receive clients or have employees at your place of work, then it’s not required to apply for a home-occupation permit. However, you do need to comply with the regulations imposed on home occupations.