Last Updated on March 22, 2021 by Filip Poutintsev
One of the requirements for starting any business is to get a business license. It does not matter if you are a small street vendor or a large manufacturing company. In any case, you will need a license. In this article, we will point out
- How and why governments must issue business permits?
- How do get a permit for real and online businesses?
- What do you need to get your permit?
- Do you need a business license to sell online?
1. What is a business license?
A business license is permission that governments give to individuals or legal entities, such as companies, organizations, and institutions, to set up a business in a geographically controlled area.
2. The need for a business license
Governments legalize certain businesses by issuing licenses. The need for a license to operate companies and individuals is usually due to the creation of a tool to control and organize businesses. The government control of businesses covers various aspects.
The environment
Because the operation of businesses can have environmental impacts, the need to obtain a trade permit allows governments to take into account the ecological potential of an area or its environment (such as pollution, endangered species, forests, and resources).
Environmental economy and sustainable development are the requirements for maintaining continuous growth and prosperity. For this reason, the awareness of creating a business that has environmental effects makes it necessary for governments to obtain a permit.
Standardization
Another reason for obtaining a business permit is to standardize products and processes. Businesses that want to be licensed must not only have processes but also have to have standard work environments and products. These standards include various issues such as maintaining the quality of products and paying attention to the health and safety of employees. The issuance of a trade license means that the company or factory is committed to complying with the standards. Accordingly, they will be fined if it ignores these standards for any reason.
Since non-licensed businesses are not allowed, then this process would prevent non-standard companies’ operations accordingly. Existing licensing standards also provide some assurance to the buyer that the product provider company has used a minimum of standards in the final product and production process. Another aspect of these standards is the obligation to enforce the business to honest advertising and to refrain from providing false and misleading information to customers.
Tax policies
One of the most important aspects that makes it necessary for governments to obtain a business permit is to collect taxes. Taxes are generally the main source and one of the most important sources of government income. Therefore, collecting taxes from all those who do economic activity is one of the most important tasks to guarantee this income. One of the steps in obtaining a business permit is to introduce and settle the tax of a business in the tax administration. In this process, this business is registered as one of the taxpayers who must pay the tax to the government in each fiscal year. The business permit allows governments to collect taxes and to have statistics on the situation of operating businesses. For example in the case of wholesaling and reselling, the applicants have to obtain a wholesale license.
Support for businesses
Of course, businesses are also subject to legal protections. Because business permits give investors credit for the investor’s economic activity, individuals and companies can also receive bank loans. Many countries have set up small business support agencies to help them accordingly.
3. Comparison of Business permits all around the world
In the United States, states have independent laws of their own, and licensing is subject to state government laws. Based on their geographical location, climate, land use, and type of business activity, states decide whether to allow businesses to operate. Of course, in the UK, there is no license to start a business; but it is not the case that there is no oversight of businesses. There are other regulatory systems, but you do not have to pay periodically for your business to be legal.
Businesses such as building contractors, doctors, loss assessors, accountants, hairdressers, real estate agents, auctioneers, private investigators, personal security guards, and bill collectors are required to obtain official licenses. Of course, the business owners should always consult with the official licensing authorities in this regard. For example, some countries have government income tax laws, and applicants must register an employer identification number with the government revenue department or the Treasury Department.
For example, to obtain a vendor or retail license, the applicant must fill the sales tax form. Also, if the start-ups need an employee, they should probably register with the unemployment insurance system. Businesses such as investment consulting, drug production, and meat products also require federal authorization. In the United States, federal intellectual property administration allows business owners to have exclusive use of their patents and trademarks.
4. How much does a business license cost?
In countries where the applicants need to obtain a license, they periodically have to pay fees to renew their business permit. This money is spent on monitoring their economic activities.
5. How to get a business license?
The following describes how to obtain a business permit.
Business license application submission
To obtain a business license number, depending on where the applicants want to start a business, they can visit the website of the Chamber of Commerce, municipalities, federal agencies, trade unions, local courts, and licensing agencies.
What do I need to get my permit?
Different countries receive different information from applicants and, of course, impose restrictions in this regard.
- An applicant or corporate Identity details
- Age of applicants
- Certificate of non-drug addiction
- Certificate of no criminal record
- Ownership document or lease agreement of the business place
- Business location usage records
- Formal commitment to accept responsibility (legal entities)
- Certificate of financial debt inquiry
- Certificate of Tax Administration
- Educational certificates
- Certificate of health competence
- certificate of Technical skills
Federal, state, and local authorities have their checklists to qualify the applicants about their competencies in entrepreneurship, reliability, and legal behaviors.
Investigating of the application
At this stage, the representatives will visit the location and verify the documents submitted by the applicant. In this regard, the applicant reliability, compliance with entrepreneurial requirements, as well as the required professional qualifications are examined by the authorized departments.
Issuing the business license
If the documents are approved, the business license will be issued with a permit number. In the case of rejection, the applicant will be notified. The applicant or company can object to any of the above steps and the licensing authority must review his complaint.
6. Do I need a business license to sell online?
Starting an online business such as an offline business requires a business permit, and the applicant must follow the steps listed in the previous section. For example, the Center for E-Commerce Development in the United States provides checklists to consider online business applications. Having hardware and software infrastructure as well as confirming the banking portal connection are among prerequisite requirements for obtaining an online business license.
