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Licensing Is a Slobbery Beast Best Tamed by a Pro

Annika Mengisen

What is it? Licensing.

And each industry and business is unique, so there's no surefire way to beat the beast.

Nobody likes to bite the bullet and ask for directions. If you choose to go it alone, organizations such as the Small Business Administration list where to obtain a business license by state. Microsoft's (MSFT Quote) Small Business Center also offers advice such as having all your paperwork ready at a moment's notice.

But should you realize, as many business owners do, that every turn in the licensing world seems like a wrong one, don't be embarrassed to stop at a proverbial gas station.

Equal-Opportunity Frustration

No matter what type of business, the licensing morass can be overwhelming.

A new mobile food vendor such as Kim Ima, who sells baked goods from a moving truck, must obtain a state sales tax registration, a DBA license, employee withholding and unemployment registrations, a health department food permit, a mobile food license, and often a federal Department of Transportation number, depending on the type of truck and location. Some of these have to be renewed at different times during every year, and some requirements are subject to change.

It's not just the newbies who struggle. Multimillion-dollar companies don't get a free pass out of the labyrinth either.

Teavana, the company that is rapidly becoming to tea what Starbucks (SBUX Quote) is to a cup of joe, is opening stores all over the country. Every time it opens a new location, though, it must jump through several different licensing hoops.

When the company CheckUps was contracted by Wal-Mart (WMT Quote) to open up in-store health clinics to provide minor medical services last year, it had several new and unique permit hurdles to clear. Even companies that devote entire departments devoted to licensing are not always fully aware of the requirements.

The Gas Station

Companies such as Wal-Mart, Teavana and hundreds of small business are not ashamed to find assistance at Business Licenses, a company specializing in navigating the licensing maze.

Since the business' inception in 2004, President David Polatseck has helped horse breeders, clothes designers and food vendors in over 19,000 different licensing jurisdictions.

The biggest issue, says Polatseck, is that people just have no idea what they need out of a slew of licenses issued out of different departments nationwide. "In City Hall they might get an answer about business licenses but not health department licenses," he points out. "A lot of people just don't want to deal with the government," not to mention the often shifting tax rates.

Business Licenses provides that central nexus and will even do your paperwork for you. "Most [businesses] have their hands up, saying 'help,'" Polatseck says.

For the license-weary, the company offers an online database of 50,000 license applications. Customers can fill out all necessary applications, starting at $20 apiece, and submit online. A Business Licenses expert will then review each application and point out any potentially detrimental omissions.

With the more advanced business compliance package ($75), a researcher will analyze your business and send you all the licenses, permits and tax-regulation applications, including necessary contact information, leaving you to fill them out and send a check.

With the business-license preparation service (starting at $175), you practically wash your hands of all the grunt work: Necessary forms are found, filled out and submitted on your behalf.

The company also has audit services to make sure you renew when you have to. "If you're not up to date, it's like you never got through the licensing process," Polatseck points out.

There's also a filing service for industries, such as window installers, that need licenses on an ongoing basis. Pella Windows, one of Polatseck's clients, for example, needs a contractor's permit every time it installs a window. Economically, these services make sense for a business of any size, as the number and frequency of licenses normally goes up in proportion to the size of the business.

Survey Says

An ongoing survey done by Business Licenses reveals that 70% of its clients are small businesses that operate out of one or two locations. The bulk of its revenue, however, comes from the 30% of larger companies and corporations with numerous locations and the myriad licenses to match.

The most difficult industries to obtain the required licenses are in food, contracting, trucking and medical-related businesses.

About 75% of new companies are not incorporating, making them sole proprietors, says Polatseck, maybe because they realize that incorporation doesn't make a business legal. They still have to get a license from the local town.

The absence or omission of paperwork or license updates can lead to penalties and other padlocks, so make sure you know what you're doing -- or find someone who does. With licensing, don't be embarrassed about throwing your hands up and asking for help.