Registering a new business and going through the process of setting up the company can be an exciting experience. After officially establishing a business, you may need a professional license to run it legally. Local authorities, which regulate the area where the company is located, issue most of these licenses. Are you worried about finding the right license for your small business, or do you want to know how much a business license will cost? Read our simple guide.
What is a Business License?
Simply put, a business license is an administrative license issued by a government or a government-authorised agency which allows an individual or a limited company to perform certain business activities in the area under the administration of the government. Typically, the licenses you need to do business depend largely on where you are located and what you want to do in your business.
Business Licenses – do I need one?
Not all small businesses in the UK require a license. In many cases, you can trade without it, provided that you are properly registered with the HMRC, and you have chosen the legal structure for your company. In the US and other countries, you will have to enquire whether your business requires a license.
However, many business activities require a license in the UK and abroad. One of the best-known licenses for small businesses is, of course, the alcohol license. Some one-time business activities may also require one-time licenses, such as street festivals or other public events.
Other businesses that require regular licenses from the government or regulatory agencies include taxi services, grocery stores, hotels, pet stores, hairdressers and hostels. Childcare and kindergartens must also be licensed. You also need a license if you want to play recorded music in public, for example in a store.
If you run certain financial activities, such as lending money or recovering debt, you must apply for a license from the Financial Conduct Authority or the equivalent in whatever country you operate in..
Applying for a Business License
There are various licenses and permits for different businesses and applications for any license is typically submitted to local authorities in the area where the company is to be located.
Forms are available from local authorities or can be downloaded from the website of the relevant ministries and authorities. Licenses are typically valid for a fixed period but can be extended for another period if the authorities assess that the business is fit to continue operations.
What Happens when you run a Business Without a Relevant License?
Many businesses require a license to work legally. Failure to get the relevant licenses before you commence operation can lead to a lot of trouble down the road. For example, your business operations can be shut down, and the premises closed. You may also be made to pay some fines or face the brunt of the law.
When setting up a new company, check if you need a license before starting your business. In most cases, you can’t take out business insurance unless you have the right license for your business. This is because insurance providers want to be sure that you have done all that is legally required to run the business, otherwise insuring your business can be a risk to them.