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What's in a Business License?

CALABASAS, Calif. (MainStreet) -- Business owners must comply with government requirements regarding business licenses, permits and tax registration -- usually before making their first sale.

But knowing which forms to fill out at the county, state and federal level can be confusing and time-consuming.

Starting a business such as a food truck in Los Angeles would likely required city permits and licenses include a business license, zoning approval and a land use permit, as well as county and state permits and licenses.

"The biggest concern is, 'Did I find them all?' That's where people get nervous," says Deborah Sweeney, CEO of MyCorporation, an online document filing and research assistance service for small businesses forming limited liability companies or corporations.

Sweeney answered a few basic questions on the topic of business licenses.

Why do small-business owners need a business license?

Sweeney: A business license is a type of legal authorization to operate a business in a city, county or state. A license may even be required on a federal level. In order to determine whether or not a license is necessary, you should first check with the state and/or county in which your business is located.

As a general rule, most business need one or more federal, state, county or local licenses or permits in order to operate. Licenses and permits can range from basic to extremely specific, depending on the location and type of the business.

Imagine you want start a sidewalk or street vendor business such as a food truck in Los Angeles. A sample of the city's required permits and licenses include a business license, zoning approval and a land use permit. County permits may include a fictitious-name filing and a public health operating license. State permits and licenses may include occupational safety and health information, sales and use information and workers compensation information.

Do small-business owners need a license if they run their business out of their home?

Sweeney: Investigate local zoning ordinances covering home-based businesses. Some residential neighborhoods have strict zoning restrictions that may prevent you from doing business out of your home. Condominiums and planned communities may have bylaws that could affect your ability to do business out of your home. Yet it may be possible to get a variance or conditional-use permit. In many areas, attitudes toward home-based businesses are becoming more supportive, making it easier to obtain a variance.

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