From the March 2006 issue of Startups

Question: I'm just starting a new business. How can I find out if I need a government license or permit?

Answer: Most new businesses don't need any sort of license or permit, unless:

  • You are providing a medical, legal, accounting, engineering, nursing or other high-level service that your state has designated as a "professional service," requiring a state exam or license.
  • Your products will injure people if they are abused (think alcohol, tobacco, firearms, automobiles and boats).
  • People will be physically or financially harmed if your services aren't properly performed (think barber, day-care provider, stockbroker or building contractor).

Just about every state now has a licensing center website where you can find a comprehensive list of business and professional licenses required in your state. Connecticut's licensing center website, for example, is located at www.ct-clic.com. For a complete list of licensing center websites, go to www.sba.gov/hotlist/license.html. If your state doesn't have a licensing center, or if after viewing the website you are still not sure whether you need a license, call your state's Department of Consumer Protection, which issues most business licenses. It never hurts to ask, and most staffers will take the time to point you in the right direction, as it makes their jobs that much easier later on.

Then, pay a visit to your county or city clerk's office to find out if a local government license is required. It's best to do this in person, as they may direct you to other agencies that are usually located in the same building.

Remember, though, that every business, whether licensed or not, has to register with all federal, state and local government tax agencies, and must comply with all other laws that apply to that business. For example, even though an antiques store is not required to have a license before it opens its doors, it is required to comply with state laws that prohibit unfair trade practices such as price gouging.

Cliff Ennico is a syndicated columnist and author of several books on small business, most recently Small Business Survival Guide. This column is no substitute for legal, tax or financial advice, which can be furnished only by a qualified professional licensed in your state.