New businesses throughout the country require a business license to operate in their state, city or county -- or all three. Although specific business license requirements vary from location to location, new business owners should plan to apply and pay for a business license before they open their doors. Often, a state's Department of Licensing or Secretary of State's office can answer business owners' questions about license requirements.
Purpose
A business license is the final step in ensuring a business has completed the necessary steps to open its doors. States require new businesses to file their business name, choose a business structure and register with the division of taxation. Once these steps are complete, the business owner can apply for relevant business licenses. During the application process, the state ensures that the business owner has completed the relevant steps to operate, and receipt of the business license confirms that these tasks are complete.
Application
Business owners will submit an application to their state to begin the business license acquisition process. Most applications include basic business information, like the business name and whether it is a corporation, partnership, limited liability corporation or limited liability partnership. In addition, business owners will likely need to provide the start date for their business so that the state can process the application in time.
Cost
The cost of a business license varies from state to state -- and often even within states, depending on the type of license your business requires. Some cities, like Decatur, Alabama, and Greenville, South Carolina, determine business license fees depending on the anticipated gross revenue of the business. However, Decatur's Revenue Department states that most business licenses start between $75 and $100. Sparks, Nevada, charges an $80 fee for a business license plus a $25 processing fee. A business license in Chino Hills, California, costs $53 a year.
Payment Penalties
Business owners have to renew their licenses annually, and it is essential that they renew them on time to avoid late fees. Most licenses expire at the end of the fiscal year -- Sept. 30 -- so business owners need to renew their license in person, by mail or over the phone before that date. Check with your state to determine when the license expires and what the renewal fee is. In many cases, business owners can expect to pay the same amount every year.
