What are the types of business licenses out there, as well as the requirements associated with them? This article should help clear up some of your questions. Just keep in mind that, while we’ve made every effort to ensure the information below is up-to-date and accurate, it doesn’t constitute legal advice, and it isn’t a substitute for legal advice. If you have specific questions about your particular business, contact your attorney for guidance.
The Basics on Federal Licenses and Permits
For most small businesses, the federal government doesn’t require licenses or permits. But there are certain types of activities that are regulated by one or more federal agencies, and those activities might require a federal license or permit.
What are the types of business activities that are regulated by federal agencies and may require a federal license or permit?
- Alcoholic beverages
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
As an example, if your business is involved with aviation, you’d be regulated by the Federal Aviation Administration, so that would be the place to go for more information.
Tip: You can access a list of all federally licensed activities, along with links to more information, by visiting the website maintained by the U.S. Small Business Administration.
What About Washington State Requirements?There are a few states in which all businesses need to obtain state business licenses, in addition to any local licenses required. Washington is one of those states.
Virtually all businesses in Washington need to obtain a state business license. You obtain this license by completing the Business License Application and paying a $19 fee. You can apply online or by mail. This one application registers your business with several Washington state agencies, including the Departments of Revenue, Employment Security, and Labor & Industries. Once registered, you will receive a business license and Unified Business Identifier (UBI) number from the Business Licensing Service. The UBI is a nine-digit number allows you to do business in Washington State.
In addition to a state general business license, you may need to obtain a professional or occupational license from the State of Washington. Like all other states, Washington has license and/or certification requirements for an array of business activities and occupations that require extensive training or that expose consumers to potential hazards. Those include:
- Medical professionals
- Building contractors and other construction related occupations
- Barbers and cosmetologists
- Architects and engineers
- Real estate brokers and salespersons, and
- Private investigators and other security services
If you want to look through a comprehensive list of all of the occupations that are regulated by Washington state agencies, as well as access links to the appropriate agency that would apply to your business, click here.
Note: The procedures for getting your business license will vary from one occupation to the next. You might have to meet specific educational or training requirements, or you might need experience in the field. You might even have to take a written exam and pass it before getting your license. And, as you might have guessed, there is a license fee that you’ll need to pay as well.
All these requirements are complicated. Luckily, The State of Washington has an online Business Licensing Wizard you can use to determine which licenses you need and where to get them.
Do you really need to worry about getting your Washington business license?
Yes! In the event that the state discovers that you’re operating a business without a required license, a host of bad things can happen. You’ll undoubtedly be ordered to stop doing business, for one thing. But you might also be fined. Failure to obtain a license can constitute a crime as well. So going through the proper steps to get your licenses before you start conducting business is always a wise move.
What About Local Licenses?
In addition to a state business license, you’ll likely need to obtain a local business license from the city or county in which your business is located. You may even need multiple licenses if you do business in more than one area.
Each Washington city and county establishes its own licensing requirements and procedures. Keep in mind, though, that most counties and cities in the state require business licenses or permits for all businesses, including one-person, home-based operations.
Usually, you just have to pay a fee to get a local license in Washington. Fees will vary by locality, and they could range from as low as $25 to as high as a few hundred dollars. Fees can also be based on your projected gross revenue (for example, 10 cents per $1,000 of projected revenue).
The good news is that getting your local license is pretty easy. Basically, your city and/or county has a website that will explain its licensing requirements. You can find a comprehensive set of links to license information for Washington state cities and towns here.
Many localities let you apply for a business license using the State of Washington Business Licensing Service. Others allow online filing through the FileLocal website. Otherwise, you might be able to download an application and email it to the appropriate party or just mail it in.
What will you need to provide when submitting an application for a local business license? Well, you’ll likely be asked for the following information:
- Social Security Number or Federal Employment Identification Number
- A description of your business activities
- Your legal business name and any assumed name or “dba”
- Your business start date
- The number of employees and your expected annual sales
- Your business address and contact information
- Each business owner’s contact information
- Your business sales tax number, if any
Just keep in mind that you’ll be required to renew your license periodically, and that might involve an additional fee. Oftentimes, a renewal is required every one to three years, so be sure to mark your calendar so you don’t skip a beat and so you don’t have to pay late fees.
Do you really need to worry about getting your local license?
Yes! It’s true that some self-employed individuals, particularly those who work from home, never get a local business license. But if your local government were to find out that you’re running an unlicensed business, you might be fined, and you might even be prevented from doing business until you obtain the license. So it’s always best to avoid problems by researching the license(s) you need and applying for them so you can do business without having to worry.
Stephen has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for small businesses, entrepreneurs, independent contractors, and freelancers. He is the author of over 20 books and hundreds of articles and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Among his books are Deduct It! Lower Your Small Business Taxes, Working with Independent Contractors, and Working for Yourself: Law and Taxes for Independent Contractors, Freelancers & Consultants.