Business Licensing Requirements

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 What is Business Law?

Business law, which is also referred to as commercial law, is the term for the body of laws that govern business entities as well as commercial transactions. Business laws govern nearly every aspect of all businesses.

Business laws may vary based upon:

  • The type of business, such as a private vs. a public business or a for-profit vs. a not-for-profit;
  • The structure of the business, for example, a corporation vs. a general partnership; and
  • The jurisdiction where the business is located.

Business laws include local, state, and federal regulations. Under the broad umbrella of business law, there are various specialized categories that apply to businesses.

Common examples of areas that business law may apply to includes:

Each of these may include even small categories. Additionally, each state may have its own specific laws and statutes governing specific business topics, including media and communication.

Because of the intricacies of these laws, it is important to consult a local business attorney for further advice or concerns.

What are the Different Types of Business Laws?

As previously noted, there are numerous different types of business laws that govern the various aspects of a business. For example, many aspects of a business fall under employment law, including:

  • How to pay employees;
  • Providing employee work benefits; and
  • Arranging employee work schedules.

If the owner of a business was just beginning and they needed to register and set up the business, it would involve business laws such as the laws governing business formation and structures, The Federal Tax Code and state tax laws. If the business owner decided to register intellectual property, such as a copyright or trademark of the business, both state and federal laws would apply.

A large portion of business laws deal with contract and commercial law. Commercial and contract laws regulate many different types of business scenarios and issues, including:

  • Forming agreements with certain distributors to sell their products;
  • Providing to services to customers;
  • Merging with another business;
  • Business deals and sales transactions; and
  • Employee non-disclosure agreements.

Every state may have its own specific business laws that are unique to the region. Because of this, it is best to consult with an attorney who can address specific laws in an individual’s area.

For example, South Dakota business litigation laws may differ greatly from Montana business laws.

Why Does Business Formation Matter?

One of the first first decisions that the owner of a business will be required to make when forming their company is determining what type of business structure they wish to use when they are registering their business. An individual may choose from many different types of business formations, including corporations, LLCs, and partnerships and nonprofit corporations.

Which business structure a business owner selects may have a significant impact on the future of the company. This is due to the fact that how a business is formed will dictate issues including:

  • The amount of funds the business is permitted to receive from investors;
  • How many individuals can sit on a board;
  • Who will be held responsible for the debts or liabilities incurred by the business; and
  • How the business will be taxed.

There are also certain business formations that provide rules governing how the company must operate. For example, to exist as a valid limited partnership, the business must have at least one partner who serves as a general partner to the entire partnership, or the person who manages the business, as well as one limited partner.

What are Business Licensing Requirements?

A business licensing requirement refers to the various license and certification elements that the business must fulfill in order to operate in a particular area. These may vary by state as well as according to the type of business that is involved.

The license laws may also vary from city to city. They may even vary by location within the same city.

This is due to the fact that business license requirements may vary depending on issues such as:

  • Geography;
  • Zoning; and
  • Environmental factors.

For example, there may be different requirements for a business that is operating in a business area as compared to a home-based business.

What are Some Types of Licenses Required for Businesses?

Depending upon the type of business that is being operated, there are various licenses and permits that may be required for the business. In addition, there may be different requirements based upon state and federal laws.

License topics may include:

  • Licenses and permits to sell certain subjects, especially liquor licenses and gun sale licenses;
  • Environmental licenses, which may include federal requirements, such as those involving fishing and wildlife, mining of natural resources, and maritime licenses;
  • Licenses related to dumping and disposal of waste;
  • Professional licenses such as:
    • Dentistry or medical licenses;
    • aviation licenses;
    • psychology licenses; and
    • other professional licenses; and
  • Licenses related to corporations and corporate activities.

Following licensing requirements is very important for smaller startup businesses. The failure to follow license procedures and requirements may lead to negative effects for a business.

What if a Business Violates License Laws?

The failure to obtain a proper license when it is required or the failure to maintain a current and valid license may result in legal consequences, including:

  • Fines;
  • Suspension of business rights;
  • Overall loss of operating privileges; and
  • In some cases, criminal consequences may result, such as criminal fines and possible jail times;
    • This is common for violations related to pollution and dumping.

One common mistake occurs when a business moves forward on the assumption that their license is current and valid when, in fact, it has expired. It is important for a business to ensure that all of its licenses are valid and that it is following all federal, state, and local laws.

Should I Hire a Business Lawyer?

There are numerous different areas of business law and the licensing requirements and laws can be complex. Although it may not always be necessary to hire an attorney, there are times when it may be in your best interests to consult with a business lawyer for assistance.

Your lawyer can assist you with any issues, questions, or concerns you have related to business licensing. This may include advising you of any filing requirements, researching applicable laws, and many other tasks.

It may be helpful to consult with an attorney when you are deciding the best way to structure your new business and protect your intellectual property rights. If a dispute arises and you have to file a lawsuit or your business is involved in a lawsuit, your attorney will represent you throughout the process.

Your attorney can also assist you with issues related to dissolving your business if the need arises. If you have any questions regarding filing business taxes or selling your business, your lawyer will typically have business contacts, including accountants, real estate agents, and of course, other successful businesses.

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