There are certain formalities one must undertake when starting a business. With the growth of the web as a commercial medium, there is a question as to whether all or some of these formalities are applicable to internet businesses. For instance, is a business license required for an internet business?
A business license is a revenue generator for cities and counties. You typically pay an annual fee for the right to conduct business in the location in question. This fee is separate from the much-discussed Internet sales tax.
In my hometown of San Diego, for instance, the City of San Diego requires you to obtain a license if you do business within the city. There are other cities within the County of San Diego, however, and each has its own requirements. Head north along the coast for about 15 minutes, for instance, and you end up in Del Mar. In this beach town, you need to be licensed by Del Mar, but not the City of San Diego. The same goes for many other incorporated cities in the county.
Municipalities have finally realized there are lots of people within their borders who run internet businesses. They are starting to become stricter on licensing issues. Most now require Internet companies, even home-based versions, to obtain a license. You will need to check the website for your city to learn more, but you should anticipate needing a license.
One area you need to be careful with is zoning. Certain areas in your city will be zoned as purely residential or commercial. If you are working from home, you need to make sure the zoning allows it. With millions of people now working out of their house, the vast majority of municipalities have very clear and liberal standards. Check them.
In truth, applying for a business license is pretty easy. The license is a revenue producer for the municipality, so the relevant government agency keeps things simple. The cost usually runs well under $50 annually as well.
The process is more annoying than anything. You are forced to file the application and then, in an antiquated process, give notice of your business license request in a local publication for four consecutive weeks or so. This requirement is the primary reason little local community newspapers survive in a digital era.
Is a business license required for an internet business? Generally, yes. Once you have complied with all the necessary requirements, you will be granted your license. Lucky you.
What do you do with it? You post it on the wall next to your computer where “the public” can see it. There it shall stay until next year rolls around, you send in the annual fee, and a new license comes in the mail. You then stick that one on the wall and the process continues until the Sun eventually runs out of fuel, and we are all vaporized.
Richard A. Chapo, Esq.
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