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  • Start Your Startup Right

    Game Plan

    In-Depth

    How to Get the Right Licenses

    Getting the right licenses is really an exercise in checking the boxes. The hard part is finding out which ones you’ll need. This depends on your line of business and your location in states and local jurisdictions that want to tax and regulate you. For example, the federal government requires licenses for business in industries that could have an environmental impact (agriculture, fisheries, mining and drilling) or where safety is a concern (aviation, firearms, nuclear energy).

    States and local jurisdictions cast a wider net. The licensing process is basically the get-acquainted phase of the tax collection process. Certain professions also require professional licenses. Obviously, doctors have to pass the medical board, and lawyers the bar exam, in the states in which they practice. Different professions that require licensing include: architects, body piercers, cosmetologists, driver training instructors, martial arts teachers, real estate agents, and whitewater rafting outfitters.

    Finally, you may be required to collect sales tax on whatever you sell. This too will require a license or permit to get you established with the government entity that you’ll be collecting for.

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    Game Plan

    • How do you find out about all the licensing requirements you’ll be subject to? The hard part turns out to be pretty easy. Any accountant will be happy to tell you. The more the better—for them, as you may need help filling out the forms or, eventually, computing the tax liability.
    • For the independent-minded entrepreneur, the SBA has a “Permit Me” tool on their website that promises to “help business owners navigate the process.” When you enter your zip code and business type, it’ll provide information on the licenses you need, often with direct links to online application forms.