If your company does business in multiple jurisdictions, business license compliance is critical to maintaining uninterrupted operations. But for many companies, licensing compliance isn’t always a top priority.
Maintaining business licenses is a complex task. Up to 65% of license registration requirements change annually, and enforcement against business license violations is increasing. Indeed, business license tax collections are growing twice as fast as other types of mandated taxes and fees.
To help you navigate the ever-shifting landscape, we’ve compiled answers to some of the most asked questions on business license regulations.
Which states are the most regulated?
Regulatory requirements for business license can vary widely according to industry and location. Healthcare, pharmaceutical, insurance, financial services, and construction are among the most highly regulated industries.
The states that tend to be the strictest in terms of business license compliance include California, New York, Texas, Florida, and Illinois. Learn more about the top regulated states for business licenses and what’s driving enforcement.
We have employees working from home in different cities or states. Are business licenses required for each jurisdiction?
We have seen a trend in local-level jurisdictions requiring a home occupation permit or business license, sometimes irrespective of whether revenue is being generated in that state.
Always conduct business license research to ascertain the correct requirements based on the employee's home address. These requirements are continuously evolving, and it is important to map out your risk levels and maintain a cadence of updating your research semi-annually or annually.
For more information, read about business license requirements for remote workers.
We are an e-commerce company. Do we need to register in all 50 states?
If you sell online, depending on a state’s tax nexus rules and types of products or services sold, you may need a license or some type of registration in every jurisdiction where you have a customer. Tax nexus is where a business is obligated to pay sales tax to a state.
A business does not have to have a physical presence in a state to trigger tax nexus. Nexus can also be established when the business meets a certain threshold in terms of dollars in sales and/or number of individual transactions. To learn more about this requirement, read Impact of the Supreme Court’s Wayfair decision on state sales tax laws.
