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Business Structures, Licenses, and Permits! Oh My!

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When you start a business, there’s a lot of information thrown at you all at once. You’ve got to choose your business name.  And come up with a killer business plan. Find office space. Hire people. And now you’re hearing all these other buzzwords that people tell you you need to handle if you want to operate your business legally. Here we’ll define business structures, business licenses, and permits so you’ve got the lowdown on what you need to know to start your business on the right foot.

What in the World is a Business Structure?

A business structure simply refers to the legal entity you set your company up as. You’ve got three primary options for a small business:

  • Sole Proprietor
  • Corporation
  • LLC

Your business operates as a sole proprietorship by default if you choose no other business structure. While it’s the simplest and requires no work on your part to set up, it also is the riskiest. As a sole proprietor, there’s no legal separation between you and your business, so if you’re ever sued, your personal assets may be taken to cover your debts. With corporations and LLCs, you’re separate from your business and your assets are safe.

Then, What About a Business License? Do I Need One of Those?

Your city and state government likely require small businesses like yours to have one or more business licenses to operate. Now, these will vary depending on where you live, but here are a few examples:

  • If you sell bedding, you need a bedding license that certifies that you uphold certain quality standards
  • If you work in radiology, you will need a radiology license to operate
  • If you work out of your home, you may need a home based business license

It’s important that you do your research before you start operating to ensure that you apply for — and get approved — the necessary business licenses for your company.

And Then, Tell Me About Business Permits

Business permits are similar to business licenses in that they are often required for specific types of companies or actions. Again, check with your local government to find out what permits you need. Often, permits have to do with changes to your office or retail space, such as:

  • An alarm permit if you plan to install an alarm system
  • A development permit if you are developing land for commercial use
  • A sign permit to display your business signage

It’s your responsibility to find out which business permits you need to make modifications or developments for your business. If you want to operate without issue, get these handled before making any changes.

Staying on top of your business permits and licenses, as well as choosing the right business structure, will set your business up for success!

Founder of CorpNet
Nellie Akalp is a serial entrepreneur, small business advocate, speaker and author. She is the founder & CEO of CorpNet.com, an online legal document filing service, where she helps entrepreneurs start a business, Incorporate, Form an LLC, set up Sole Proprietorships (DBAs) and keep a business in compliance across all 50 United States.