You’ve cleared some of the initial hurdles on the way to launching your own business.
You’ve committed yourself, chosen and registered a business structure and name. Everything’s off to a good start.
Before you race too far ahead, you need to find out whether any aspect of your operation requires a license or permit and then factor into your plans the time it will take to go through the permitting process.
All kinds of businesses operate in Minnesota with no special permission or constraints. But others are closely regulated and may require one or more business, occupational or environmental licenses or permits.
Licenses and permits protect consumers and advance broad social goals that benefit everyone – environmental protections for land, water and air, for instance. Generally speaking, licenses and permits:
- Certify the competency of individuals in business, trades and professions
- Ensure the safety and effectiveness of products and processes
- Encourage or restrict competition in a specific industry
- Help prevent fraud and ensure financial solvency in business transactions
- Control market access or the development or implementation of new technology
- Promote responsible use of natural resources, especially non-renewable resources
- Authorizes businesses to serve as the state's agent for collecting revenue
Do You Need a State License?
Typically issued at state and local levels (though there are some federal licenses), a business license is a legal authorization to operate in a city county or state. In most cases, you’ll pay a fee to the licensing jurisdiction.
To find out whether you’ll need any state-required licenses, permits or registrations to operate your business start by using Minnesota ELicensing, the state’s licensing web portal. This site is easy to use and conveniently lets you access licensing information by activity, administering agency, name of license, or with a keyword search.
License Minnesota provides information on more than 750 licenses/permits/registrations/certifications administered by 47 state agencies. Get the details on permits, registrations, certifications, credentialing and other forms of approval granted by state agencies and boards as a condition of doing business. That includes conducting a trade, profession or occupation, pursuing a recreational activity in the state, as well as the right to use and operate certain equipment and vehicles.
In addition to the licensing requirements imposed by the state, many local governments also require licenses for certain kinds of businesses.
In some cases, cities and counties may require a general business license that involves no more than registration and payment of a fee. In other cases, it may involve compliance with local ordinances specific to a particular type of business.
For instance, commercial building contractors are not licensed by the state, but many cities require them to register with the city and be bonded before the cities will issue building permits or conduct inspections of their projects.
Larger cities like Minneapolis and St. Paul have licensing departments. Smaller ones may rely on the city clerk. In any case, a phone call or visit to your city or county offices can help you determine whether or not you need to meet local requirements.
Many local governments make business license information and application forms available online. You just download and complete the documents, mail them in or file them in person.
Some cities allow you to complete the entire process online. Once your application is reviewed and approved, you may pay your fees through a secure website and print your license.
No matter how you apply for a license, it’s easier if you all have of the necessary information at hand before you begin completing the applications, including tax or other business identification numbers, certificates of assumed name under which the business will run, and business organizational documents filed with the secretary of state.
There may be other permits you must obtain or regulations with which you must comply, depending on your business. You need to know whether your business must comply with local zoning restrictions, whether it requires environmental permitting and review, or whether you’ll be subject to performance bond requirements. It’s important to remember that certain issues may affect you even if you operate a business out of your home.
Contact local zoning boards or planning commissions to determine if there are any regulations surrounding the space in which you plan to operate your business. Zoning ordinances of each local community spell out the land-use rules and the procedures for petitioning for a variance.
Remember, it pays to ask questions about licensing, permitting, registration and regulation early in the planning stages. Be thorough. Err on the side doing too much homework. If you overlook or ignore these issues, you place your business at risk of being fined or shut down until you comply.
If your business is involved in activities supervised and regulated by a federal agency then you may need to obtain a federal license or permit. A few examples:
- Agriculture - If you import or transport animals, animal products, biologics, biotechnology or plants across state lines, you’ll need to apply for a permit from the U.S. Department of Agriculture
- Alcoholic Beverages - If you manufacture, wholesale, import, or sell alcoholic beverages at a retail location, you will need to register your business and obtain certain federal permits (for tax purposes) with the U.S. Treasury’s Alcohol and Tobacco Tax and Trade Bureau
- Aviation - If you're business operates aircraft, transports goods or people via air, or aircraft maintenance you’ll need to apply for one or more licenses and certificates from the Federal Aviation Administration
- Firearms, Ammunition and Explosives - Businesses that manufacture, deal and import firearms, ammunition or explosives must obtain federal licenses and permits
- Commercial Fishing - are required to obtain a license for fishing activities from the NOAA Fisheries Service
- Mining and Drilling - Businesses involved in drilling for natural gas, oil or other mineral resources on federal lands may be required to obtain a drilling permit from the Bureau of Ocean Energy Management, Regulation and Enforcement
- Transportation and Logistics - If you operate an oversize or overweight vehicle, you’ll need to abide by the U.S. Department of Transportation guidelines on maximum weight.
Several state agencies are responsible for protecting the environment. If your business generates hazardous waste, solid waste, electronic waste, food waste, discharges wastewater or storm water, or emits a wide variety of air pollutants, you may need a permit.
Certain types of industries are regulated under the Clean Water Act, even if they discharge their wastewater to a municipal sanitary system. Examples of these industries are: pulp and paper mills; most food processing plants; textile mills; chemical manufacturing plants; electroplating companies; plastics and other synthetics manufacturers; fertilizer plants; metal manufacturing plants; steam power plants; companies producing leather, glass, asbestos, rubber, and timber products.
Some businesses in Minnesota are required to carry certain types of bonds, which are similar to an insurance policies between a bonding company and the business that purchases the bond. The bonds protect customers and clients against financial loss caused by the business.
Businesses ranging from electrical contractors to residential roofers and a lot in between have bonding requirements.
Performance bonds guarantee a company's capacity to perform a specific task and provide financial guarantees that services will be provided and contracts fulfilled according to mutual terms. When a principal breaks a bond’s terms, the harmed party can make a claim on the bond to recover losses.
Some public and private contracts can require fidelity bonds, which guarantee against loss (like theft of money or property) due to the dishonesty of employees.
Businesses that contract to provide goods or services to the state or other public agencies within the state generally have performance bonds. These bonding requirements are established by state law.
Bonds are obtained through insurance agents or through a bonding company. The cost of a bond is a portion of the face amount of the bond and will depend in part on the risk to the bonding company in covering the potential loss.
Consultants at our Small Business Assistance Office can help you understand more about the basics of business licensing. And our network of Small Business Development Centers has experts located in nine main regional offices and several satellite centers statewide.
Our Guide to Starting a Business in Minnesota provides a detailed look at this and other important issues.