When embarking on the exciting journey of opening a storefront retail business, owners often forget to consider one of the crucial steps to a successful launch: securing a business license. Not only do most municipalities mandate this license, but it also adds credibility to your venture and opens doors to various benefits.
Recently, in a previous post, we discussed the need for various licenses and permits. In this article, we’ll explore why you should get a business license, what you might need in terms of fees and legal documents, and the steps to acquire one. We will also highlight why procrastinating in this process can cause some very serious problems.
Why Should You Get a Business License?
Include legitimizing your business in your business plan and your start-up budget:
- Legal Requirement: In most jurisdictions, operating a business without the proper licensing can lead to hefty fines and other legal repercussions.
- Credibility: Customers and suppliers often feel more comfortable dealing with a licensed entity.
- Access to Benefits: Business owners can only access some benefits, like certain business bank accounts, loans, or grants, with a proper license.
Three Reasons NOT to Put Off Getting a Business License
Avoid the following problems which can happen as a consequence of failing to get a business license when required:
- Legal Repercussions: Operating without a license can lead to shutdowns, fines, and even legal action against you.
- Missed Business Opportunities: Potential partners or suppliers might hesitate to work with an unlicensed business, fearing reputational damage or legal complications.
- Loss of Revenue: Without a bona fide business and supplies, you can’t make money.
What You Might Need
When you apply for a business license, be prepared with the following:
- Fees: The cost of a business license varies based on location, type of business, and other factors. Always check local regulations.
- Legal Structure: Whether you’re a sole proprietor, an LLC, or a corporation, your town, city, or county might have different licensing requirements. Decide on a structure that best suits your business needs.
- Business Plan: “If you fail to plan, you plan to fail.” Some municipalities may ask for a business plan that outlines your business model, target audience, revenue projections, and more to ensure you comply with local ordinances and laws.
Steps to Acquire a Business License
Plan to follow the following steps when you apply for your license, though some elements may vary depending on your region:
- Research Your Local Requirements: Start by visiting your city or county’s official website or office to know the exact prerequisites.
- Choose a Business Name: If you haven’t already, select a name for your business. Depending on your region, you might need to register this name. Sometimes business operate with a different name than the name of their legal structure (such as their corporation or LLC). They may need to register a fictional name otherwise called a “Doing Business As” or DBA.
- Get a Federal Employer Identification Number (EIN): This unique federal ID for your business is required for tax purposes.
- Complete the Necessary Paperwork: Fill out the licensing application whether online or with a paper form. Provide all requested documentation, like your business plan or lease agreement.
- Pay the Fee: Once you’ve gathered all the necessary paperwork, pay the licensing fee. Keep the receipt for your records.
- Await Approval: Some municipalities grant licenses immediately, while others might require an inspection or additional verification.
In conclusion, do not make the mistake to think that you can omit obtaining a business license for your storefront retail business as mere bureaucracy. For most brick-and-mortar business, the foundation for your business’s future growth and success lies with having the appropriate license. Ensure that you remain informed, proactive, and compliant to navigate the entrepreneurial journey with confidence.
If you need assistance in navigating your way to opening your dream business, Matanky Realty Group stands ready to give you a hand. Our years of experience shaping communities in Chicagoland and the Midwest helps our clients to open their businesses with minimal obstacles.