Stage Two - Getting Licensed

10 Steps to Starting a Business

STAGE TWO – GETTING LICENSED

Obtaining Business Licenses & Permits

This newsletter continues the multi-part series describing the 10 Steps to Starting a Business, which are described as follows:

1. Business Formation
2. Fictitious Name Statement
3. Apply for Business Permits and Licenses
4. Employer Identification Numbers
5. Verify Employment Eligibility (Form I-9)
6. New Hire Reporting Program
7. Withholding Requirements
8. Insurance Requirements
9. Workplace Poster Requirements
10. Pay Taxes

The first newsletter discussed the first two steps in Stage One (Setting Up Shop), and provided an overview of how to legally set-up and form a business entity.  This newsletter continues with this series and discusses Stage Two (Getting Licensed”), which covers the third step of starting a business, and provides an overview of how to obtain the business licenses and permits necessary for actually running a business after it has been set up. 

As explained in this letter, simply having a legally formed business entity through which you can run your business doesn’t mean your business is actually authorized to engage in the type of activities you wish to perform.  After forming your business, you must then obtain a variety of licenses and permits, depending on the type of business you intend to run (e.g. restaurant, bar, retail sales, etc.).  In other words, even though your business CAN engage in business, you need to ensure that it MAY engage in business – in the same way that even though someone can drive a car doesn’t mean they are legally permitted to do so without a driver’s license.  Accordingly, Step 3 of setting up a business involves identifying, applying for, and obtaining all necessary licenses and permits necessary to operate your business.

3.       Apply for Business Permits & Licenses

Obtaining all necessary licenses and permits for your specific business can be incredibly convoluted and time-consuming, as there are various license requirements at every level of government – from the Federal level to the State level, all the way down to the County, City, and sometimes even a regional or local level. 

CALGOLD.  To help employers determine which licenses and permits they need for their particular type of business, the State of California has created an online service called CALGOLD.  Employers can use CALGOLD to search for all licenses and permits required for a specific type of business (say, a restaurant or bar), within a specific County (say, Los Angeles), and the search results will provide an extensive list of all licenses and permits required at the Federal, State, County, City, and even local and regional level.

For example, a search of CALGOLD for restaurants operating within Los Angeles County indicates that such businesses may need to obtain the following licenses and permits:

• Alcoholic Beverage License (“Liquor License”)
• Sales & Use Permit (“Seller’s Permit)
• Public Health Operating License (“Food Service Establishment Permit)
• Building and Construction Permit
• Burglar Alarm Permit
• Business License (Business Tax Certificate – see EAN, above)
• Conditional Use Permit (required for sales of alcohol)
• Industrial Wastewater Discharge Permit
• Land Use Permit
• Zoning Approval

While CALGOLD is invaluable for small business owners by providing them with an easy-to-use means of identifying all permits and licenses potentially required for their specific business, take note that identifying the licenses needed is simply the first step.  Once you have identified the licenses your business must have to operate, you must then apply for and obtain all such necessary licenses and permits.  And completing the applications for each type of license or permit required is often less than intuitive – requiring multiple application forms to various government entities, all requesting different forms of identification and information.  Accordingly, while CALGOLD provides small business owners with a vital and truly ingenious service, its limitations must be recognized, as it leads business owners to the uncharted labyrinth of communicating with a myriad of government entities and complying with their numerous rules and regulations.  And furthermore, failure to have all required licenses and permits can subject you to serious fines, lawsuits, or penalties.  Therefore, while CALGOLD points you in the right direction, it is still highly advised that you employ an attorney to assist you with Step 3, and oversees the process of obtaining all required licenses and permits for your business.

Assuming we have now successfully completed Steps 1 through 3, our business should now be formed and properly licensed to engage in business.  However, now that you may lawfully engage in business, you now come to the most precarious stage in setting up and running a business – Hiring Employees!  Accordingly, we are now ready for Stage Three – hiring employees and complying with California’s litany of employer requirements.  Stay tuned for the following newsletters, which will carefully walk us through the steps involved in Stage Three – complying with California’s employer requirements…