As a small business owner, there will be times when you need to contract with other companies for products and services. If you haven't already done business with the company or its owner, it is often wise to verify that it has the appropriate permits and licenses to operate. Fortunately, license and permit verifications can usually be done quickly and easily online.
Understanding Licenses and Permits
In most areas, individuals and business entities need to hold certain government licenses and permits to do business with the public or practice a trade or profession. In addition, other types of permissions may be necessary to ensure public health and safety.
Business licenses: Business licenses are typically issued by state and local authorities and give a sole proprietor, partnership or corporation permission to operate. Because of the way state laws and local ordinances intersect, it isn't unusual for a company to have more than one business license – one from the state and one from the city, for instance.
The process of qualifying for a business license depends on state and local laws, as well as the type of business. Many businesses may only need to fill out an application and submit it to the appropriate regulatory agency along with payment for the required fee. In other cases, a more comprehensive investigation into the business and its operations will be required before a regulatory board issues a license.
Professional licenses: Professional licenses are separate and distinct from business licenses. While a business license permits a business entity to engage in transactions with the public, a professional license permits an individual to practice a specific trade or profession.
Laws in all states limit the practice of certain trades and professions to people who hold appropriate licensure. Cosmetology, medicine, nursing, architecture, and HVAC contracting are all fields in which workers must hold a current professional license.
Permits and certificates: Business owners often have to obtain additional permits from local agencies and authorities to own and operate a business. For example, the owner of a liquor store may have to hold permits from state and local liquor regulatory authorities, along with a certificate that the building has passed safety inspections. Restaurant owners may also have to submit to periodic sanitation inspections conducted by local agencies.
Determining the Information You Need
Before you begin the verification process, find out what information you need. If you are unfamiliar with a particular business, professional or tradesperson, you may want to complete a more comprehensive verification than if you are considering a relationship with the company that is well known to you and others.
An example might be if you're planning to hire a catering service. Laws in your area require caterers to hold state and local business licenses, to have a current health inspection certificate and at least one person on the premises who holds a state food sanitation certificate.
In this case, it is not enough to simply verify that the caterer has a state business license. You'll also want to check and make sure its facility has an up-to-date health department certificate and that its supervisors hold current food sanitation credentials.
Online Verification Options
Brick-and-mortar businesses typically display their licenses and permits in public view. In addition, a company may include information about its licensing, including the license number, on its website, business stationery or literature.
Still, it's often a good idea to verify whether a license or permit is current. The websites for state and local departments of professional licensing, business licensing and health and safety typically provide a search feature that allows you to check on the status of a license. Processes vary, but you'll usually just be able to enter the name and location of the business or individual who you are researching. The website should tell you whether the license has been issued, and when it will expire.
Professional licensing websites often contain information about individuals who are subject to disciplinary procedures. If you are trying to determine whether you want to work with particular professionals, check to see whether they have been disciplined by their professional board in the past.
Lainie Petersen writes about business, real estate and personal finance, drawing on 25 years experience in publishing and education. Petersen's work appears in Money Crashers, Selling to the Masses, and in Walmart News Now, a blog for Walmart suppliers. She holds a master's degree in library science from Dominican University.