Most of the time, you need a business license to operate as a business. However, there are some exceptions.
For example, if you are working as an independent contractor, then you do not need a business license. You also do not need a business tax ID number.
Licensing Requirements Vary
Freelance graphic designers do not require a business license because they operate under their names and report business earnings as personal income, but freelance cosmetologists must obtain a license.
A freelancer operating in Philadelphia requires a business privilege license, while a freelancer operating in Washington, D.C. needs a general business license.
Use the Permit Me tool to determine licensing requirements for your services in your area. A business license is required by law if you want to work as a personal services provider. You need to be licensed as a plumber or flooring contractor. You must also register your business name with the state.
Who Needs A Business License In California?
In the city where your business is located, all businesses are required to obtain a business license. Businesses located in unincorporated areas of the state must obtain a business license through the county administration.
Do I Need a Business License To Freelance?
Freelance writers should know what licenses they need before launching their freelance careers.
Local chambers of commerce can help them figure out if they need to get a business license.
What Is A Business License?
A business license is a government issued permit to legally conduct business on local, state, and federal levels. It shows that you’re qualified to perform your professional duty of keeping the public safe.
You adhere to local regulations, like zoning. Your business license helps the government to ensure that businesses are running above board and aren’t abusing the public.
It makes it easier for the government to track and monitor your money flow, so you can pay more tax.
Freelance licenses differ by state but generally require registration and filing fees. You’ll also need to file an application form with the state government. For example, California requires a $250 fee per year.
Different Types Of Business Licenses
Sole Proprietorship
A sole proprietorship is a type of business structure that allows an individual to operate a business under his or her own name.
Sole proprietorships are usually used by individuals who want to start up a new business but do not wish to form a corporation. As a sole proprietor, you’ll receive all of the profits made by the business. There is no need to file any paperwork with the state.
You can reformat the business how you want, but it’s hard to change things once they’re set up.
There’s no legal difference between you and the company, so if something goes wrong, you could end up paying for it. A sole proprietorship is great for one person who doesn’t expect to get sued.
Limited Liability Company LLC
An LLC is a hybrid between a sole proprietorship and a corporation. It protects businesses from personal liability. Flexibility allows you to change your federal tax classification. These costs include filing fees and annual taxes.
Liability insurance protects your business from lawsuits or other legal claims. It helps pay for any damages caused by your business if someone sues you.
An LLC is a separate legal entity that operates independently of you. This means that if something happens to your business, you won’t be held liable for the damage.
Once you’ve decided what type of business license you want, you can take a close look at the different types available.
