Many individuals go into business without knowing the significant importance of a business license.
They, therefore, are sometimes faced with various disturbances from government officials for lack of business licenses.
Sometimes a business place could be locked up for a certain period, thereby discontinuing sales and services.
Therefore, to enjoy uninterrupted rendering of sales and services of a business, having a business license is of great essence.
A business license is a legal document issued by government agencies to an individual or company for the uninterrupted running of a business.
This document gives the business owners the legal right to run their businesses in the geographical area it was issued.
There are various types of business licenses that business owners should be familiar with.
The type of license individuals or companies opts for depends on the nature of goods and services they render.
Some business owners and companies will even need the combination of two or more licenses from different agencies to run a business.
In applying for a license, it’s essential to research the appropriate license for the business. It’s also important to make findings from the agencies on the things to put in place for obtaining a particular license.
This article will take you through the various types of business licenses and their uses.
Types Of Business Licenses
1. Doing Business As (DBA) License
It is also referred to as “fictitious name,” “trade name,” or “assumed name.” A DBA license is issued to a business entity that renders goods and services under a name different from its legally registered name.
Some business owners who choose to render their services from home should opt for a DBA license.
A DBA licensed individual can transact business in the company’s name and also run a company bank account. This type of license can be filed for online or any regional licensing office.
2. General Business License
A general business license is issued to any business entity with a visible location and rendering its services within a particular city.
This type of license can’t be transferred to any other individual or company. For this business license to be approved after being filed for, it could take about 45 working days.
However, this type of license requires renewal every two years, and each renewal attracts a certain fee as demanded by the agency. In case of relocation, the agencies in charge of the new location gain control of the handling.
3. Special Business License
Some individuals or companies are into very sensitive services to the public. These companies require proper monitoring and regular checks.
Before licenses could be issued to such businesses, a strict inspection must be carried out. Intense scrutiny is necessary to avoid issuing licenses to businesses engaging in illegal transactions.
Therefore, after obtaining the general license for these businesses, it’s also mandatory to get the Special Business License.
To obtain this license, proper checks must be carried out on the business owner. The fingerprints of the owner are recorded as well as other standard inspections.
This license has an expiration date of one year and should be renewed every year.
Below is a list of some of the businesses that are mandated to acquire the Special Business License:
- Antique dealers
- Cleaning services
- Friendship clubs
- Car dismantlers
- Dating services and many others
4. Municipal And Provincial License
For business owners or companies to operate in any province, it’s legally in place to obtain the required license.
A country or city will not discriminate against individuals or companies rendering services to customers in that part.
However, there are different rules and regulations guiding businesses in different provinces.
Therefore, it is mandatory to obtain a Municipal And Provincial License for a business in the province it is located.
5. Direct Sale License
A Direct Sales License is issued to business owners who render goods and services directly to their customers.
A direct sale is any business transaction where the business owner can realize a substantial amount of money.
This is usually carried out outside the business owner’s or companies’ address. Take, for instance, carrying the business directly to the customer’s house or office.
A direct sale includes person-to-person transactions. Therefore, an additional contract requirement available at the Provincial licensing office is needed for a Direct Sales business License.
Operating a direct-selling business without a business license could affect the business. This is because customers could decide to terminate their business contract after a while if they discover you lack proper licensing.
6. Sales Tax License
A sales tax license is mandatory for a business or company that’s located in a province that charges tax on sales and services. Sales tax license isn’t only issued to businesses that offer sales alone; it is also peculiar to service rendering businesses.
Business owners need to find out from their local, regional, or state revenue agencies if their business is liable for this license.
7. Federal Business License
A business can only be issued a federal business license if it provides sales and services to other states and provinces.
To be issued this particular type of business license, a business must have met specific requirements in a selected trade.
The criteria to be met may be diverse, depending on the location and type of establishment.
A business person who wishes to trade in drugs and consumables must have met the Food and Drug Administration (FDA) requirement.
In addition, a trader should have at least groomed their business to a level of sole proprietorship before requesting for Federal Business License.
8. Professional/Occupational Licenses
This license is mainly issued to individuals who wish to go into any profession or vocation. It is issued when the business owner and employees have shown undeniable proof of their ability to render such services.
Examples of professions that can request a Professional/Occupational License includes:
- Medical care
- Real estate
- Legal practices
- Auto repairs and so on.
Obtaining an Occupational/Professional License could be complicated. Therefore, it’s advisable to consult a legal practitioner in business to guide you through.
As much as businesses exist, so do licenses differ. The nature of the business an individual wishes to go into determines the type of license to obtain. The most important thing to consider while going for a license is to know the kind of business you wish to operate.
However, it is essential to consider where you wish to render sales and services from. Whether or not you have obtained your licenses, it is imperative to acquire relevant permits.
This will enable you to run your business without disturbances from agencies till you have obtained the necessary licenses.