Being an entrepreneur requires a well-sorted business plan, business medium, and an inventory of other administrative tasks required.
Some individuals get so caught up with all these tasks that they completely forget the legal work, which can be the foundation of your business.
Although the process and requirements of getting an online business license can get complex, still it shouldn’t deter you from acquiring one because it can make your business appear to be legitimate.
In this article, we will explore the many questions related to business licenses exclusively for your online business.
What is a Business License?
A business license is a permit issued by the government that allows a business to operate in the particular area it is issued in.
This means, if you are having multiple businesses across the world then you would require more than just one license.
Varying upon your state or county laws and the type of business activity you perform you might or might not need an online business license. So, it’s ideal that you head to the government agencies and jurisdictions to inquire about the right license for your business.
Do I need an Online Business License?
Even if you don’t operate from a brick and mortar space you must obtain an online business license.
It lets government keep a track of your business activities, and at the same time, your customers know that that you are running under the government’s approval and are a legit entity.
The state officials are also obliged to charge you with penalties if you fail to attain a license and the amount is determined by calculating the revenue you have earned in that period without a license.
Even worse could be the possibility of a business closure if you fail to obtain or renew a business license.
So, the answer to this question is a big YES!
How much does a Business License cost?
The cost of a business license is determined by what you sell and where you are residing.
However, it usually ranges between $25 to $400 with an additional $25 for fingerprinting and processing.
This amount should not be taken as a burden because the fees you’d have to pay as a penalty for working without a license can be much more than that.
Newly emerging businesses are to pay a fee projected according to the total income earned from the start of business date till December 31st.
Whereas, the existing businesses have to get their licenses renewed every year and the charges for that are calculated according to previous years’ gross income.
When and How to apply for a Business license?
Some businesses require you to be at a particular revenue threshold of your business to obtain a license while others need it even before they start selling.
So, the answer to that is with your state or municipal governments.
You’ll be guided about the documents and permits you need and some officials may allow you to apply online while others need you to show up in person for application.
How to determine which license your business requires?
Like mentioned earlier, your state and business type determine whether you qualify for a business license. The four main kinds of business licenses are elaborated below:
1. General License
Also known as a business operation license this is the most vital kind of license because some states require all companies to obtain it to run.
A general license demonstrates your company’s ability to function within the bounds of local regulations and thereby permits you to operate your business within your city or state.
One should consider the laws of this license for their business because if found operating without it can lead to steep consequences.
2. Doing Business As License
If you want to run your company using a different name from your state-registered name, then consider getting a DBA license.
In the US, a DBA license lets the public know the real identity of the seller so phony companies can’t benefit by hiding their identity.
However, the rules of this license vary from country to country so reach out to your state council to confirm if you need it or not.
3. Sales Tax License
For your business to make transactions on taxable items getting a sales tax license is a must. If you make transactions without this certificate out of ignorance it can result in hefty penalties.
Like other licenses, this too has diverse laws and regulations according to the state or county you run business in. So, reach out to the municipalities and jurisdictions to inquire about the laws and also probe if you require other tax permits aside from sales tax.
4. Occupational License
The occupational license demonstrates the business owner’s credibility to provide the unique demands of their industry.
Teachers, therapists, doctors, lawyers, architects, accountants, and electricians are a few occupations requiring an occupational license.
Again, as regulations are diverse in every state, for this license you must consult your state’s license authority to verify yourself.