When Should You Get A Business License? (do you even need one?)

Do you need a business license to start an online business? If you start looking online, you can quickly become confused and overwhelmed and get conflicting advice about what exactly is the bare minimum legal stuff you're supposed to have just to start a small, simple online business. I'm attorney for online business owners Brittany Ratelle, and I'm here to make it easy to get legally legit so you can show up and own your business with confidence. And today we're going to be answering the question of what exactly is a business license and do you need one? Make sure you like and subscribe this video, and if you need more information on how to grow, scale, and protect your online business, make sure you check out our other videos. Quick disclaimer here, because what kind of attorney would I be without a disclaimer? While I am a licensed attorney, I'm not your attorney. This is not official legal advice. This is for informational purposes only. But if you have questions how this might apply to you, your business, please contact a local attorney in your jurisdiction to make sure you get the best support as possible. All right, let's get into this. So a business license, you've probably seen, are usually framed on the wall of a business, whether it's a restaurant or it's your favorite nail salon, or maybe it's a child care center., it probably begs the question of, I have a business, just because I maybe don't have a physical location, am I still supposed to get one of those licenses? It looks like it's part of the business starter kit, right? Along with that and like the first dollar bill that people frame and put on the wall. And you can see why it's a little confusing whether or not you're supposed to have this depending on what type of business you have and where you live. And so these business licenses are commonly referred to as tax certificates, permits, and can be called different things in different jurisdictions. So how are you supposed to know if you're supposed to have one? Great question. The first step is you want to research your state's requirements. For larger areas, it's going to be your city that cares. If you live in the country, or especially if you live in an unincorporated area, meaning you fall in kind of the gaps in between and you're not technically within the city limits, you might need to check your county resources. Normally going to your Secretary of State website, the commercial division, or even the Small Business Association Administration website is going to be really helpful. As part of that step, you obviously want to figure out where exactly do you live in the city limits, and if you are going to be under this jurisdiction of a city or a county, because that's really the locality that cares about whether you have a permit or not. And just to be really clear here, we are not talking about a sales tax permit or reseller's permit. And we're also not talking about an LLC or a sole proprietorship or a DBA. So sales tax permits are usually a different filing, and it's actually the tax authority in your state that cares about that. And they care if you are selling physical goods or sometimes repairing physical goods. And most recently, some municipalities have started to get into the digital good game, and they want a cut of that too. Sorry, but that's not what we're talking about with a business license. We're also not talking about an LLC, a sole proprietorship, or a DBA. These are all kinds of entities or business registrations that have to do with your filing and being registered under your Secretary of State and their commercial business database. And again, this is actually not having anything to do with you operating your business. That's normally going to be on the more local level with your county or your city. So we've talked about you got to figure out where exactly you live, and then the kind of the next step is to figure out, does your industry apply? Because what you're doing in your actual business, you need to have a business license. And here's a help here, is that if you are in a more regulated industry, there's a higher likelihood that you're going to need to file and have a business license. So for example, if you are selling food or alcohol of any type, you probably need a permit. If you are operating a daycare or something else along with children or minors, you're probably going to need something. If you are dealing with animals, if you are doing manufacturing, if you are operating a travel agency, if you're doing wholesale, certainly if you're some sort of professional, then you might not only have to have a license, but also be licensed through the professional organization. There's also a lot of random information that says if you're in a highly regulated industry, like you're in firearms or medicine or nuclear engineering, then you're gonna need to have a permit. Probably don't have a lot of people who are running nuclear sites or like commercial fisheries. So no offense if that happens to be in your bucket, but it's probably not a surprise to you. Then you're gonna have to go through some other hoops before you set up your business. You are probably in a business from home and you're a dropshipper, you're running an Etsy store, you're maybe Maybe an affiliate, you have a blog, maybe you're a service provider and you want to know what about those businesses, Brittany? Do I have to get anything extra to operate those businesses in my city and county? And here's where we're going to go to step 3. My best step is to call the office. And this seems silly, but honestly, because we're dealing usually with a smaller locality, you really want to just call them and talk to a live human, explain to them what you do in your business and see, do I need a license? And they'll tell you and they'll tell you usually the next steps of do you need to come in person to do it? Is there a form you can fill out online and kind of what the fees are? The fees are usually pretty nominal. We're talking about like $15, $30, usually under $100. It is something you probably will need to renew. So you want to make sure you ask how often do you need to renew your license or your permit? And what are the obligations if like you change your address or you change what you're doing in your business, just to make sure you're staying compliant. There's going to be a lot of variety on how regulatory your area is and how much they care about what you do, even when you're operating a home-based business or a virtual-based business. But typically, if you you don't have people coming and going from your house, you don't have the commercial presence, retail presence, if you're not manufacturing something, meaning you're not like making widgets and there's noise and there's odor and you have a drain on the power grid, your neighbors don't know that you're running a business in your house, then it's more likely that you might not need a kind of operating a business permit or a license to operate your home-based business. However, it's a really good idea to check, and that way you just know where you stand, especially if you want to have the security to make sure that you can move forward and register your business and that your state isn't going to cross-check and check the database as you maybe file for an LLC. This is especially important if you are working with other vendors who require and say, hey, we want to have proof that you have a business license or you operate here. You'd like to be able to have that and to be able to show them that. This is also really important if there's any chance that you're ever going to go out and bid for a government contract. You want to make sure that all of your T's are crossed and your I's are dotted and that you've done all the formalities you need to be able to show up and bid on a government contract, which is always going to have a little bit more red tape. Those are some of the benefits of going through this process and making sure your business is covered and can operate the way you need to. We talked about we're going to call the office, we're going to see what we need and make sure we understand where we live and what we operate, and then be prepared to offer up information. Things like the name of your business, your EIN or your business's Social Security number, and that's your tax ID number, information about your address, your phone number, your business contact information. And some states might require some additional documentation, but that's another good reason why you want to call, and that way if you need to prepare those documents, you have those prepared beforehand, you can bring it in, make make it a one-stop shop and be done. These are the big things to be able to make sure that you have that business permit or business license, or you can just cross it off your list and know that you've looked into it, that you feel free and confident to be able to operate and sell on Amazon or Shopify or Etsy, that you can show up as a home-based or virtual business, and that you are in compliance with the law as far as your city or county is concerned. Remember that if you have some sort of physical presence that you're impacting your city, then it's more likely that you will need an operating permit. This means that if you are impacting parking, a sewer. If you have a commercial location where people have a storefront and people are coming into your store, even if you just have physical inventory in your house, that may tip the scales and that it's necessary for you to have a business license. And it's a really good idea to make sure you're protected. You certainly don't want to put your business or your assets at risk if something were to happen. For example, what if there were to be a fire? You want to make sure that you were running like an illegal business and then your insurance could stiff you and not cover your inventory. Or if someone slipped and fell, you were running a quiet client-based business in your house, you want to make sure again that you have that full business protection. And so you do want to make sure that you have whatever licenses you need to cover your butt. And make sure you check in the comments to see if I have resources for your specific state and locality. And give me any questions if you have. I'm so glad that I could be here to help you through this process. Remember that we just want to attack these tasks of running our online business one step at a time. And know that as we move forward, we're going to own our business and be business owners and make sure that we can get ourselves legally legit, protected, and ready for growth. I'm attorney Brittany Ratelle. Thanks so much for being here.