Licenses and Permits
What’s the Difference? Do You Need One or the Other?
A license is a certificate granted by a government agency that gives one permission to legally engage in a business, occupation or activity. Depending on the type of business you plan to operate, you may need a license from certain municipal or county agencies. Food-related businesses, for example, are subject to special restrictions and inspections by both local and state health departments. If you work with flammable materials, you may need some kind of permit or official okay from the Fire Department. If your business causes the release of any materials into the air or water (even a ceramic kiln), you may need approval from the local environmental protection agency.
A permit is similar to a license, except it is granted by local authorities. Some communities require a permit for almost everything while others require it only for businesses that involve food, direct selling and home shops. In years past, permits were rarely required for small craft businesses. Now, however, many communities see homebased entrepreneurs as a great source of extra revenue. So, depending on where you live, you might have to pay between $15-$200 for a “home occupation permit” that contributes to community coffers but does absolutely nothing for you.
If a license or permit is required and you operate without it, you run the risk of discovery, which could lead to a fine or an order to cease your business. No one goes around checking to see who has a license and who doesn’t, but authorities sometimes discover unlicensed businesses by checking state sales tax returns and resale licenses, or they might read about a crafter’s homebased business in the local newspaper and check their records to see if the business is registered. Call your city or county clerk for more information on this topic.
For detailed information about the tax, legal, financial, insurance, and government regulations applicable to an art or craft-related business in the U.S., see The Crafts Business Answer Book.
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