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Permission, Please

You might be your own boss, but you still have to answer to a higher power: the licenses and permits you need to make your business legal.
January 1, 2003
URL: http://www.entrepreneur.com/article/58560

OK, let's review the checklist for opening your business's doors to the public. Got your signage? Check. Business cards and fliers? Check. Inventory? Check. Licenses and permits? Er, hold up on that one. What licenses and permits?

That's the question 17-year-old Justin Wilkinson found himself asking the day he received a letter from the Iowa Department of Agriculture. Wilkinson raises more than 100 songbirds, which he sells to local pet stores and bird lovers through his DeWitt, Iowa-based business, J.A.M. singers.

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J.A.M. Singers, which began as a project for the FFA (originally the Future Farmers of America), quickly took off. Wilkinson entered a national business plan competition and was named Youth Entrepreneur of the Year. Afterward, he was the center of attention, receiving newspaper publicity--even a letter from the governor of Iowa.

And then there was that other letter, the one from the Iowa Department of Agriculture. Not only did they want to know if he had a license to sell birds, but they also told him that a state inspector would soon be paying him a visit. "I didn't even have a clue that I needed a license," says Wilkinson.

Fortunately for Wilkinson, the problem was easily remedied. The state inspector found everything in order. Wilkinson paid a $50 fee for the pet shop license his business requires. He's a lot wiser now and knows that, by Iowa law, he must have a license if he sells six birds a year or makes $500 in profit.

Ready for Anything
The Iowa Department of Agriculture isn't the only government organization to spring inspections on unsuspecting business owners. Dolly Jane Barnes, the 17-year-old owner of Blue Ribbon Honeybees in Selmer, Tennessee, has to be prepared for surprise visits by the Tennessee Department of Agriculture. "Sometimes they call and let us know they're coming, and sometimes they just drop by, so we have to be ready," she says.

Because inspectors can show up anytime to inspect her bees, Barnes is always ready. To keep her bees healthy, she keeps a close eye on her eight hives and participates in a voluntary bee inspection program through the department of agriculture.

Like Barnes, Chad Williams, the 19-year-old owner of The Juice, a restaurant in Wellfleet, Massachusetts, has to be ready for anything. Like most restaurants, The Juice had to pass an inspection by the health department and secure a food establishment permit before it could open. The annual fee for the permit is $75, and Williams has to be prepared for surprise visits from the local health inspector, who rates the restaurant and employees on the way food is handled and the cleanliness of the kitchen.

As part of some new health regulations, Williams also had to take a two-week course on safe food handling taught at the University of Massachusetts Extension Service. He then had to pass a test to get certified as a food protection manager, as the health department requires that a certified food manager be on hand at all times. Williams is expected to train another employee to enforce food safety regulations when he can't be there.

By law, Williams must display his food manager certificate and his food establishment permit where everyone can see them. Although his permit could be revoked if he fails to comply with regulations, he rarely has any problems. "I know what they're looking for, and I'm ready," he says.

Getting Ready for Business

Even though it all worked out for Wilkinson, it was still a close call. The Department of Agriculture could have shut down his business. That's why it's so important to have your licenses and permits in order before you open for business.

Depending on the type of business you are starting, you may need a permit, a license or both. Or you might not need either one. But how do you find out?

For licensing regulations, the best way is by contacting your state government offices. Ask for a list of businesses and professions requiring licenses in your state as well as information on the laws and regulations for your specific business.

In most states, people who are in business to provide personal care, such as barbers, cosmetologists and medical caregivers, are required to be state-licensed. Many states also have licensing requirements for professions such as teachers, lawyers, electricians, plumbers, building contractors, insurance agents, real estate brokers and animal caregivers.

Some counties and cities also may require one or more local occupational licenses before you open for business. Check with your city and county governments to find out what regulations apply to you.

Obtaining a permit usually requires passing some type of inspection or test as well as paying an annual fee. There are several types of permits that could be required. In some areas, businesses that are open to the public must have a permit from the local fire department, showing that they meet fire safety regulations. Restaurants and food handlers usually need permits from the health department.

As with a license, it's important to check city, county and state government regulations regarding any permits you may need for your business. A good place to start is your town hall. The city clerk will be able to direct you to the correct city departments that can explain the local regulations that apply to your business.

Whew! Sounds like a lot of work, doesn't it? Making sure you have any necessary licenses and permits in order before you open your doors does require a little extra legwork, but as Wilkinson learned, when it comes to licenses and permits, what you don't know can hurt you.