As far as Business Licenses go, every state and usually every major city within that state each have different rules, limits, restrictions and regulations when it comes to what constitutes a “hobby” and what qualifies as a “business”. In general, many states have minimum income requirements that must be met before a license is required. Please visit your state’s licensing department website to research the details of acquiring a business license in your area.
The question of the week is:
My business is super-micro-tiny and not bringing in a whole lot of income.
Do I need a business license to operate my business?
For the sake of brevity, let’s assume that you’ve already researched your local laws on running a business in your area and found that there is a minimum earning limit of $600 per calendar year before a business license is required. We’ll also assume that your business has not earned more than $600 in one year thus far, so the real question becomes:
If I don’t earn enough to require a license, why should I consider getting one now?
There are quite a few good reasons why getting a business license now would be good for growing your business. Here are just a few…see how important they will be to your business in the near future:
- • You are putting together a business plan for this year that will grow your business
- • You plan on buying a large bulk of supplies for the inventory to implement those plans
- • You plan on spending a good amount of your marketing budget on business cards, website development, etc.
- • Your business was brand new last year and you plan on continuing to grow it even further it this year
If you are planning on growing your business this year, then you will need the benefits that having a business (and resale) license affords for your business. Some of the benefits include:
- • Buying your supplies at wholesale prices – usually 50% or more off the regular list price
- • Opening accounts with your usual suppliers that would allow you to pay for your purchases up to 30 days later
- • Discounts at local retail suppliers – anything from wholesale pricing to non-tax on cost of goods / supplies
Oh the other hand, if you are not planning to grow your business at all this year, then it might be a good idea to wait on that license until you are certain that you are going to stick with this “making money by making stuff” idea and are ready to move forward.
What do you think? Are you ready?
Business license owners, please tell us: When did you know you were ready to get your business license?