Business licenses and permits are important and necessary for two reasons: revenue tracking and public protection. If your business deals with activities that are regulated and monitored by a federal agency (like radio broadcasting, selling of alcohol or firearms) then you will be required to obtain a federal license or permit. Some states require professional licenses for business owners, like realtors, dentists, hairdressers, and physicians, to operate because the license indicates that the individual has met certain requirements of training and/or education.
Business permits typically refer to matters of safety, structure or appearance and are more prevalent on the local and state level. Health, seller’s, building and home occupation permits are all examples.
The IRS does not license your business, but it does track your company’s revenue for taxation purposes. In order to do so, you will need to apply for an Employer Identification Number (EIN) to file your business’s tax return each year. If your business requires tax permits, those are filed at the state and local government levels.
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