Did you know that more than 40% of Americans have a side hustle? Really, it’s true—Google it. Millions of people have a business they are running on top of their 9 to 5, and we’re pretty confident in saying they do because there is something they’re chasing. From a creative outlet and a way to make extra money to a way out of their corporate job, side hustles offer a sense of control and freedom at the same time.
But what happens when the side hustle gains traction and starts to look like a real business? Well, my friend, that would be the perfect time to start getting your ducks in a row. Because doing something for fun (and often under the table) is one thing—running an actual business is another. And it requires lots of actual things: a brand, website, contracts, a way for people to pay you, a legal entity, bank accounts, insurance…and a business license.
If you just made a face at the last one, keep reading.
Business licenses are on the list of what you need to get when you’re starting a business, but it is often one that is overlooked. So today, we wanted to walk you through what they are, why you need them, and how to get them—because your side-hustle-turned-actual-business deserves to have all its ducks in a row. Read on to learn how to get a business license and check this item off your list!
What is a business license?
A business license is a legal permit that allows you to conduct business within an area. It is usually issued by the specific state or municipality where your business will operate, and these vary from place to place—so you’ll want to look into the requirements for wherever you are located.
Many people don’t think they need a business license (probably because they don’t know about them), but a business license is required by law to legally operate in an area. It also gives credibility to your business and helps you get access to resources like local networking events or educational offerings from the city, etc.
Now, you might be asking yourself, “Do all businesses need one?” And the answer is no, but it also depends on which state you are in. So, as we’re going to recommend you do the research to figure out your state, county, and city requirements, we’ll also share these general rules of thumb. You likely need a business license if:
- You are a brick-and-mortar business (read: have a physical location)
- You sell goods because most states require you to collect sales tax
- You offer a service that requires licensing (examples are hair styling and food and beverage)
How to get a business license
The good news is, getting a business license isn’t very complicated—you just need to do your research and then make sure you follow a few steps.
The first step is to look up what kind of requirements there are for your specific state, county, and city. Of course, this varies wildly, but often includes things like getting permits related to zoning, health, and safety, or taxes.
2. Submit an application
Once you’ve done your research and know what kind of license you need for your business, it’s time to submit the application for a business license. This usually involves filling out some paperwork (either online or in person) with information about your business like address, industry, etc.
3. Pay the fee
Each state has its own fee for business licenses, so do your research and make sure you know what that is. This may also be called a licensing fee or an occupational tax—whatever it’s called, make sure you have it ready before you submit your application!
4. Make sure you’re compliant
Once your application is submitted, you likely need to make sure that you are compliant with any other requirements related to the type of business you run. This can mean getting additional permits or licenses, completing continuing education courses, etc.
5. Renew your license regularly
Most business licenses require renewal after a certain period of time, so make sure you know when your license needs to be renewed and set a reminder for yourself.
That’s it! It might seem like the process is complicated but with a little bit of research and preparation, it won’t take too long to get your business license squared away—and then you can be confident your business has what it needs!
Want to make sure you’re covering all your business’ bases? We have lots of helpful articles covering tons of topics in the Business Strategy section of our blog!