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 due to a lack of business licenses.
Sometimes, a business could be locked up for a certain period, causing sales and services to discontinue.
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 business owners the legal right to run their businesses in the geographical area where they were issued.
There are various types of business licenses that business owners should be familiar with.
The type of license individuals or companies opt for depends on the nature of the goods and services they render.
Some business owners and companies will even need to combine 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 what to put in place for obtaining a particular license.
This article will take you through the various types of business licenses and their uses.
Different Types of Business Licenses
1. Doing Business As (DBA) License
It is also referred to as a “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 render their services from home should opt for a DBA license.
A DBA-licensed individual can transact business in the company’s name and run a company bank account.
This license type can be filed online or at 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 license type can’t be transferred to any other individual or company.
For this business license to be approved after filing, it could take about 45 working days.
However, this license type requires renewal every two years, and each renewal attracts a certain fee as the agency demands.
In 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.
A strict inspection must be carried out before licenses can be issued to such businesses.
Intense scrutiny is necessary to avoid issuing licenses to businesses engaging in illegal transactions.
Therefore, after obtaining the general license for these businesses, getting the Special Business License is also mandatory.
Proper checks must be carried out on the business owner to obtain this license.
The owner’s fingerprints 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 customer services in that part.
However, there are different rules and regulations guiding businesses in different provinces.
Therefore, a business must obtain a municipal and provincial license in the province where 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 make a substantial amount of money.
This is usually carried out outside the business owner’s or company’s address.
For instance, it could involve carrying the business directly to the customer’s house or office.
A direct sale includes person-to-person transactions. Therefore, a direct sales business license requires an additional contract requirement available at the Provincial licensing office.
Operating a direct-selling business without a business license could affect the business.
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 in a province that charges sales and services tax.
A sales tax license isn’t only issued to businesses that offer sales alone; it is also peculiar to service-rendering businesses.
Business owners must 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 license if it provides sales and services to other states and provinces.
A business must have met specific requirements in a selected trade to be issued this license.
The criteria to be met may be diverse, depending on the location and type of establishment.
A businessperson who wishes to trade in drugs and consumables must meet 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 a Federal Business License.
8. Professional/Occupational License
This license is mainly issued to individuals wishing to enter 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 include:
- Medical care
- Real estate
- Legal practices
- Cosmetology
- 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 the process.
