Business license is a specific document that allows running business and operating in specific business field. Generally, the license is issued by the government, agency or governmental institutions. The necessity for obtaining a license before starting particular business is usually defined by law.
Running business without a license, when the law requires its acquisition, is illegal and the government inspector may impose a fine, requiring stopping activities unless the necessary license is obtained. Licensing usually refers to specifically regulated business field, such as banking, alcohol and cigarette trade, oil business, providing taxi services, security services, etc. When a company applies for a license, normally several requirements must be met, thus providing a guarantee that the business will be carried out with a high level of professionalism and will comply with specific requirements. The overall object of licensing is the protection of public interests, such as health and security, as well as controlling strategic or relevant industries.
License and permit
Many types of businesses require certification or permits beyond the regular licenses. Compared to license, the permits refer to authorization in order to carry out activity that is connected and directly linked to the company’s activities. For example, fire-security permit, in case your company uses any flammable materials or, if your premises will be open to public, such as restaurants, shops and other public buildings. Permission to use parking, if you provide taxi services, permit to start new building or renovation as well as permit from environment protection bodies, if your business may affect the environment, etc.
Business activities, requiring license or permission
At the company formation and business start-up stage it is necessary to identify, if any license is required. License is usually required when providing financial services, such as banking, since the strict regulation of European Union law is applicable. The same applies to other monetary services that involve money transfers, financial institutions, insurance companies and insurance brokers, trade with obligations and securities, trade with jewelries and gambling. In some jurisdictions license for auditors, attorneys at law, notaries, bailiff require permission. Acquisition of a license is necessary for construction works on the site. Different type of sales tax should be applied in case some jurisdictions require seller’s permit and, in addition, registration in the tax registry, VAT payer registry or acquisition of a tax free certificate.
Depending on type of products, the licenses and permits can be necessary for different scopes, for example, for alcohol trade you might require wholesale or retail license, or license for strong alcohol beverages and beer. If the company conducts business related to sale of excise products such as coffee, oil, tobacco, or provides warehouse services for above-mentioned products, such activities require the acquisition of a license.
Pharmaceutics, medicine manufacture and activities related to addictive and psychotropic substances also require a specific license, which usually includes several criteria to be fulfilled, since the activities are directly related to human healthcare.
Commercial activities with explosives, pyrotechnics and other explosive materials, as well as all type of firearms and ammunition and other substances that are necessary for military purposes are strictly regulated and require a license in order to deal with. If the company provides transport related services such as cargo or passenger transportation via airways, railway, ships or motorways – a transportation license will be required in the majority of cases.
Mail services and wireless communications, social services, employment agencies, security companies, private detectives – all of the above require a license. Environment impacting activities such as geology, oil manufacturing, activities that may cause environment pollution, rubbish and waste disposal and recycling, activities with chemical substances and radioactive materials – also require a license.
Hotels, hostels, guest houses and other tourist-related locations as well as tourism operators and tourism agencies require a license.
Wood recycling, cultivation and cutting, land surveying services – require a license. Hunting and hunting-related activities require a license. The same applies to anglers. Production and distribution of strategic resources such as gas, electricity and water require a license. In each jurisdiction the list of commercial activities subjected to licensing may differ.
License acquisition
Before becoming fully operational, company should identify, if the planned activity requires a license so that the company may apply to the competent institution, if required. In order to obtain a license it is necessary to draft documents approving the fulfillment of all criteria. Depending on the type of a license, it might be necessary not only to fulfill conditions for the company, but it also may be required for company officials or employees to undergo certain procedures.
After all documents are ready they must be submitted to the competent institution. After revision of submitted documents, institution will consider if the documents comply with the laws and regulations. If so – it will grant a license. Acquisition of a license often requires a payment. License can be issued for one year, five years or other term, as well as for indefinite period of time.
