Can a business license be revoked?
ComplianceOctober 17, 2022

What happens if your business license is revoked?

To maintain the good standing of your business, it’s critical that you keep up with licensing requirements — or risk penalties, fines, or a revoked license.

In most cases, a business or individual with a suspended or revoked license is not allowed to operate until the license has been reinstated.

In this article, we explain what you must do to keep up with licensing requirements and what can happen if your business license is revoked.

Why would a business license be revoked?

A business license can be revoked for several reasons, including:

  • Failure to renew
  • Lapsed requirement (i.e., a failure to obtain a required surety bond or insurance certificate)
  • Violation of local codes or ordinances
  • Violation of state law
  • Business misconduct
  • Failure to pay fees, taxes, or judgments

In several states, a business license can also be revoked for failure to pay child support.

Heavily regulated industries have more rigorous licensing requirements. For example, contractors who operate in California and Louisiana must report certain events or information (such as changes in personnel, bonds, and insurance) or face an automatic license suspension. In some cases, the license may be revoked for one to five years, and the business can incur fines up to 10% of the total contract value.

Marijuana businesses are also closely regulated. These businesses must meet numerous state and local requirements to maintain a marijuana license once approved, including product testing, compliance reporting, and ensuring the business is operational by a certain time. In South Lake Tahoe, California, a marijuana dispensary’s cannabis and business licenses were revoked for failing to open on time! And in 2021, Missouri state health authorities revoked several medical marijuana business permits for failure to meet operating deadlines.

Consequences of having a revoked business license

If you operate without the required business licenses, you can face several penalties, including:

  • Financial penalties
  • Interruptions in business operations
  • Criminal sanctions
  • Negative publicity

A revoked business license can also impact your relationship with clients and future business opportunities. For example, contractors with a revoked license may fall into breach of contract. Contracts with general contractors often stipulate that the contractor maintain compliance with all laws. If a license is suspended it can create challenges with the state contractors’ board and with clients.

How to reinstate a revoked business license

Your ability to have a revoked business license reinstated depends on the type of license, the violation, the licensing authority, and the jurisdiction in which you operate.

Depending on the state or municipality, you may attempt to appeal the revoked license. But there are no guarantees, and the window for doing so is often limited.

In some instances, a business license can be reinstated after you take steps to correct violations and pay the imposed fees.

If a professional license or another type of license (separate from a general business license) is revoked, you may need to reapply and provide evidence that you have complied with the terms and conditions of the revocation, paid all penalties, and resolved any civil judgments and/or outstanding liabilities.

CT Corporation can help

Outsourcing business registration and license research, applications, management, and renewals can help take the pressure off internal resources. By working with a full-service management provider who specializes in the efficient processing of business licenses, permits, and registrations, you can free up your time to focus on starting and growing your business while ensuring you keep up with changing compliance requirements.

For more information on CT Corporation services and how we can streamline your business licensing, please contact us or call us at (844) 701-2064.

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The CT Corporation staff is comprised of experts, offering global, regional, and local expertise on registered agent, incorporation, and legal entity compliance.

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