To legally operate your business, you would need to receive proper licenses and permits. I understand you might get scared, but in fact, it is not complicated. For the majority of them, you can apply online. Applying for a license and permit is one of the first things for any new business.

In these classes, I will present to you the difference between a license and a permit. I will explain to you several types of them, and what is more important, I will answer a question: “Who to apply to?”.

What is the difference between a license and a permit?

Imagine you are running a liquor store. To do it legally, you need to obtain a license for selling liquor. On the other hand, your store must be safe and secure – for that, you need to receive a permit from the fire department. 

Licenses are required for people who are in professions that might harm someone. Permits are usually given for safety issues.

What are the most common types of licenses and permits?

Business License

The majority of cities require a business license. The same relates to counties. Your city or county’s official website has information for businesses. They include permits and licenses. In case something is not clear enough, you can call or visit your local city government office for information and details.

Sales Tax Permit

This permit you cannot skip at any time. If you sell tangible goods (the ones that you can touch or hold in your hand), and your state charges sale tax, you will need to collect and pay sales tax on your items. Check your state’s tax or accounting office online for information.

Occupational License or Permit

You may need an occupational permit. It depends on the business you are going to have. An occupational license is required to operate in specific fields like medicine, law, or tax preparation. If you are planning to run a business out of your home, you might need to apply for one. Examples are financial businesses, legal offices, pets grooming, skincare, or food creation, and sales. Please check your state’s website for information on occupational licenses.

Fictitious Name Statement (Doing Business As)

Let’s take an imaginative person, John Woodwork. He would like to run his business selling roofs. If he wants to call his business Rainbow Roofs LLC, instead of John Woodwork Roofs LLC, his city or county may ask him to file a fictitious name statement. Sometimes it is called doing business as or assumed name statement to let residents of your area know about your business. Your local city or county clerk’s office can assist you with this.

Employer Identification Number

First of all – it’s free! Although it is not required in all business types, it can help keep your business separate from your personal life. 

If you have employees, then it is mandatory. Visit the IRS online for details on whether or not you need Employer Identification Number (EIN) and how to get one.  

For the United States residents, you will find details on the IRS website.

How to obtain TIN (Tax Identification Number) in the EU, please follow the link mentioned below.

Special licenses and permits

There are a few special licenses and permits you will need to receive before being able to sell to customers. Please consider:

  • Fire inspection and permit.
  • An ATF (alcohol, tobacco, or firearms) permit.
  • A building permits if your business starts in a new location, and you are renovating the existing one.
  • A health permit, if you handle or sell food and beverage products.

Professional Licenses

Probably when you go to the dentist, accountant or pharmacy, you would like to be sure that your health and life is in good hands. Therefore, this same applies to your business if you are operating in one of the below areas. Your business needs individual licenses for:

  • nursing
  • law
  • pharmacy
  • accounting
  • medicine
  • teaching
  • psychology
  • engineering
  • architecture or
  • veterinary medicine

Search for your state’s board of professional practice if you need a state license.

Business Bank Account

Both the US and EU rules stand that having a business bank account simplifies the taxations. Even if you run your business as a sole proprietor, you’d better have a separate account for business. The IRS, as well as European Union Institutions, are sticklers for not mixing personal and business funds.

P.S. Here’s a short summary of what this article is about.

  • Firstly, you have learned what the difference between a license and a permit is.
  • Secondly, you can name licenses and permits your company would need to apply for.
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