Business Licenses Overview
The requirements and costs associated with obtaining a business license in the US vary by jurisdiction. Federal, state, county, and local governments are all involved in the issuance of business licenses.
When Business Licenses are Required
- Virtually all businesses are required to acquire some kind(s) of permit, license, or tax registration in order to continue their operations.
- Even some types of activities that are typically not seen as formal businesses can attract a requirement for license application. For instance, a vacation home that is rented out occasionally is required to be licensed in some locations.
- A company that has operations in multiple jurisdictions would need to adhere to the requirements for permits, licenses, and taxes in each location where it conducts its business operations, regardless of whether the company has a physical office location within the jurisdiction.
Overview of Business Licenses
- While business licenses are issued by federal, state, county, and local governments, professional licenses are issued by professional bodies, such as medical boards and bar associations, to regulate the practice of their profession and ensure that only qualified people are allowed to do business in their fields.
- Most business licenses are expected to be renewed every year. Government agencies usually send renewal notices, but many of such notices do not get to their targeted recipients.
- The cost of acquiring and renewing a business license can range between $50 and $400, or more. And it depends on the location, type of business activity, and government rules.
- Failure to renew a business license attracts penalties like prohibition from opening a new office location, lack of permission to launch new products and services, expensive fines and interests, increased liability exposure, voided customer contracts, or suspension from operating the business.
- New York City provides many exemptions for different types of businesses that fulfill certain requirements to serve as an incentive for doing business. They include Accelerated Sales Tax Exemption Program (ASTEP), Business Incentive Rate, Employment Incentive Credit, Empowerment Zone Wage Tax Credit, and Energy Cost Savings Program.
- Operating a business in New York City also has several tax implications which also depends on the type of business activities. They include Commercial Motor Vehicle Tax (CMVT), Fuel Use Tax / Highway Use Tax, General Corporation Tax (GCT), Hotel Room Occupancy Tax, Motor Vehicle Use Tax, and New York City Payroll Tax.
We have provided general information for business licenses in the US. Information specific to New York City is included to provide an example of the requirements for business licenses, as they differ from one location to another.