Do I Need a Business License?

This question can be confusing to someone who is opening a corporation in a state. Why should you also need a business license in your city? Here are some answers that can help.

Most cities will tell you that you need a license to conduct business in their jurisdiction. But they don’t provide you guidelines around this requirement.

In most instances, if you are conducting your business 100% online and will never need a bank loan, government grant, or have any physical location, warehouse, etc., then you don’t need a business license. All you need is your documentation that states you are a corporation.

50% of you that read this article will only need to pay your federal and state taxes and call it a day. Those will be your only government obligations.

What Do I Recommend for a non-Freelancing Corporation LLC or S Corp?

Non Freelancing Business License AS Holdings and Assets

I recommend applying for a business license in your town or city, and this is why. At some point, you will need to scale your business with the money you don’t have. When that happens, a loan officer will ask for your business permit or business license.

For example, the COVID grants that were and still are handed out by the Federal government, states, and cities all require the business to have a license on file showing they have the legal right to do business in that city.

The bottom line is that if you want to scale your business, sell it at some point, or do any interaction with the state or federal government, you will need the license.

What Do I Recommend for a Freelancing Corporation LLC or S Corp?

AS Holding and Assets Freelancers

Freelancers fall into a whole other bucket. As a freelancer, you are mobile. You can work from anywhere you want at any time of the day. You don’t consider yourself doing business in a particular city and don’t have any connection to a physical entity within the state or the city. Your physical entity is your computer.

In this instance, you may never need a bank loan, may never need a grant, and may never be visible to anyone other than your state and federal IRS department. With all this said, it does not make sense to spend the extra money a year to purchase a city permit or business license.

If things change for you, then you can always easily apply for a license. They are approved quickly and primarily within one day if you walk into your local city office and apply there.

A Few More Closing Notes:

There will be some of you that follow the rules by the book, and not applying for a business license may keep you up at night. If this is you, then definitely spend the $30 - 60 dollar for the license to get that trouble off your mind.

Running a business takes a strong will and passion, but knowing when to get the little things out of your way quickly to focus on the bigger things is key to growing and succeeding in any market.

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