Intro:
Before the 1900s, the American government only regulated a handful of occupations. In addition, it mandated business licenses in a few circumstances.
In 2023, the Government, at several levels, issues an array of small business licenses, among others. For example, after entrepreneurs register their companies, they must apply and obtain general business licenses.
Then, many must apply for and obtain occupational licenses, such as:
- Cosmetology
- Nursing
- Electrician
- Lawyer
- Accounting
- Doctors
Thus, licensing has become a form of public safety and economic regulation.
Purpose of Small Business Licensing
The 1950s saw an explosion of government regulation after World War II. America also saw an economic shift. Previously, agriculture, farming, and ranching made up most of the economic and labor sectors.
Post-WWII, things shifted toward government, telecommunications, finance, and real estate jobs.
Therefore, the bureaucracy increased, followed by regulations.
Some believe that small business licensing protects the public by ensuring that each is fit to operate. Licensing also creates revenue and jobs for government agencies.
The fees charged pay the administrative salaries that produce them. Plus, they help agencies keep track of tax collection and payments.
For more information about licensing for small businesses, check out this guide from Selfgood.
Here, we outline nine types of business licenses for small businesses that entrepreneurs might need to procure.
1. General Business License
All companies, regardless of size, must apply for and obtain general business licenses. The permit approves the organization and puts them on the books.
The general business license lists companies with local government agencies and starts a cascade of additional requirements. For example, local agencies can determine the companies requiring food service licensing and sales tax permits.
In some cases, clients will only work with registered organizations. Therefore, the license legitimizes the company and becomes a marketing tool for entrepreneurs.
It’s common for trade professionals to list their license numbers of company vehicles and marketing materials. If you haven’t registered your business yet, you can check how to register your business in singapore to learn more about the business registration process.
2. Occupational License
Occupational licenses will regulate most occupations in 2023. Hair stylists, nail artists, waxers, and barbers are among the professionals who must obtain these permits.
Each professional applies for the initial permit after satisfying education and training requirements. Then, professionals renew it annually or every two years.
3. Sales Tax License
Companies that sell products or provide taxable services must obtain sales tax licenses.
The license helps local government entities collect taxes, which has become their revenue source.
4. Zoning
Communities change over time. As people establish new neighborhoods or companies turn areas into industrial parks, the lines between residential and commercial zones can become blurred.
Zoning licenses keep neighborhoods safe, quiet, and clean by preventing industrial companies from setting up shops.
It also protects industrial companies by reducing the number of nearby pedestrians and traffic.
5. Food Service
The local and state health departments regulate food service licenses. The department keeps track of food businesses through licenses and permits, such as restaurants, food trucks, and booths.
Then, it has the means to inspect them to ensure establishments follow cooking, cleaning, and selling guidelines.
6. Home-Based Business
Home-based businesses helped grow the American economy. However, some can become nuisances in residential areas.
Home-based business licenses help entrepreneurs protect themselves against complaints from neighbors. The license shows that the entrepreneurs have the approval to work in their homes and have satisfied specific requirements.
It also limits noise and traffic to keep the peace in the area.
7. Fire Inspection
Some licenses solely focus on public safety. Fire inspection licenses approve spaces for public use. For example, the fire department establishes the number of patrons who can enjoy the establishment.
It also inspects fire alarms, safety infrastructure, and exit routes.
8. Contractor
Independent contracting work has become more common. The number of individuals identifying as freelancers continue climbing.
In some cases, professionals must apply for contracting licenses, which differ from occupational and home-based businesses.
9. Transportation
Entrepreneurs helped increase the number of freelance delivery professionals and rideshare services. Some freelancers might need to obtain transportation licenses.
Others might need transportation licenses to transport specialized cargo, such as climate-controlled or hazardous.
Conclusion
Most small businesses must obtain at least one license. Additional permits will depend on the nature of the company and local regulations. Therefore, check in with local government entities and small business advisors who can provide further guidance.
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