How to Get a Business License

What is a Business License?

A business license is a document that shows that you have registered with your local municipalities for the purposes of starting & operating a business. This is important because you will want to make sure you are "legal."

Who needs a business license? Typically, anyone engaged in the process of earning an income on their own needs to have a business license. However, some locations may only require a business license if you earn a certain amount of money within a year. For instance, some locations only require a business license if you earn more than $3,000 per year.

Why do you need to get a business license? When you register or apply for a business license your local government can ensure that your business is in the proper zoning areas, and that your type of business is allowed. They will also keep track of your business to collect any taxes you may owe.

How Much Does a Business License Cost?

Typically, a business license will cost anywhere between $15-25 or more per license (depending on your location). The business license will usually last for 1 year (you will have to renew it & pay the fee each year).

Also, at the end of each year you will have to pay a tax on the gross sales that your business collected. This is usually a very small tax (sometimes as small as 1/40 of 1 percent). This amount will be deducted from the renewal fee for the license in some cases. For example if the license costs $20 per year, and the tax you owe equals $60, then you would only have to pay the $60.

How Do You Get a Business License, and Where Do You Apply?

First off, you will need to get a business license for each location of your business. So if you have multiple locations, plan on getting multiple licenses.

Also, in most cases in the United States you will be required to get a city & county business license. This means that you will have to pay the license fee for both locations (city & county) and pay any yearly taxes to both locations. Again, this amount is usually small so it is not that big of a deal.

To apply for a business license, you usually just need to go to your local municipal buildings. This is usually just the courthouse. Some locations may have a separate building for this, but usually you will apply for a business license in the same place where you renew your tags or pay for marriage licenses.

There is a basic one page application that you fill out. It just asks for basic information such as:

Your Name & Personal Information
Your business name
Your business address, phone, and other information
Type of business & legal structure, etc.

Again, this application only takes a couple of minutes to fill out. The clerk will then usually type in your information into a database, collect your fee, and print out a copy of your business license for display at your business. It takes no longer than 5 minutes in most cases.

This is usually all that is required to get a business license.

For more information or to find your local fees & information, you can check online with the small business administration. Just visit http://www.sba.gov. Also, you can normally find your state's website. This will provide specific information about taxes and other important things that apply to your location.