When you become a business owner, you are going to find yourself confronted with a litany of new words and phrases, including legal terminology, economic jargon, and general administrative mumbo jumbo. Here are three of the most common administrative terms you will encounter when you set out to open your new business.
What is zoning
City and county zoning laws dictate the types of buildings that can be constructed and the types of activity that can go on in a particular area. Before locating your business, you will need to be sure that the area you are considering is zoned for your particular business activity, or for business activity at all.
Zoning may be for a single-use, e.g., a neighborhood may be zoned single-family residential use only, commercial use only, or agricultural use only. Or, zoning may be mixed-use, for example, single-family residential/multi-family residential use, residential/commercial use, or commercial/agricultural use.
If you are planning to buy or rent space to conduct a business, the property’s zoning should be your first consideration. Similarly, if you are planning to operate a business out of your home, you will need to determine the zoning designation for the neighborhood in which your home is located to confirm that home-based businesses are allowed.
To get started, you will need to research the zoning laws for your particular city and county to determine whether your business activity can be conducted in the location you have selected. A good place to start is by contacting your city or county clerk’s office. Ask to speak with someone in the public works department and ask what the zoning designation is for the address from which you are planning to operate your business.
Then, contact the business licensing or finance division and ask if your particular business activity or home-based business is permitted within that zoning designation. Finally, confirm the verbal information provided you have been given. Visit your local county law library and ask the law librarian to help you locate both the municipal code for your city and your county’s ordinance code.
The table of contents and/or index should direct you to the zoning ordinances, which will provide you with exact information on the zoning designation for your location and the uses permitted within that designation. It is also a good idea to obtain a current copy of a zoning map from the public works department so that you can visually see what the zoning is for your location.
Keep in mind that zoning ordinances can change. Although a home-based business may have been permitted in your neighborhood five years ago, it may not be today. And just because your neighbor down the street is operating a home-based business, that doesn’t mean that such a business is still permissible in your neighborhood.
Existing businesses may have been grandfathered in under the provisions of a new ordinance to allow them to continue to operate their businesses while no longer permitting new businesses in that area. So, be sure that the information you obtain is current information.
What is licensing
The terms licensing and permits are often used interchangeably; however, they can have very different meanings. Generally, a license is a broad privilege granted to an individual or entity to pursue a particular occupation or conduct a particular type of business subject to governmental regulation.
The issuance of the license indicates that the individual or entity has complied with the requirements for that particular occupation or business. For example, an attorney obtains a license to practice law after demonstrating to the state bar that he or she has completed the legal education required by the state and passed the state’s bar examination.
Medical doctors must also complete medical school, serve a term of internship under the supervision of a licensed doctor, and pass state medical board exams before they are licensed to practice medicine.
Similarly, a real estate agent or broker must demonstrate to the state’s real estate department that the requisite education and training has been completed prior to obtaining a real estate license or broker’s license.
Licensing requirements may not only provide proof that an individual has the requisite education and training to pursue a particular occupation. For some occupations, additional requirements must be met in order to protect the public.
For example, in order to obtain a contractor’s license, applicants must not only pass an examination before the state contractor’s license board, but they must also post a bond, similar to an insurance policy, to provide reasonable protection to consumers who hire the contractor.
Private investigators and process servers, for example, who by the very nature of their occupations have extensive contact with the public, may not be required to meet any educational or training requirements. However, they are generally required to submit to fingerprinting and background checks before they can be licensed.
Other occupations require applicants to meet training prerequisites prior to the issuance of a license to ensure that the individual has the ability to perform the occupation at an acceptable level of competence.
For example, individuals such as cosmetologists or massage therapists are not only required to provide proof that they have completed training, they must also provide certification that they have completed a certain number of hours of practice.
Prior to opening a business, be sure that you know what the licensing requirements are for your particular occupation and that you have complied with all of them. Contact the state board governing your particular occupation for information as to licensing requirements.
As noted above, these requirements may include specific education and/or training, examinations, practice hours, and/or proof of insurance. Certain occupations also require that you provide regular proof of â€ścontinuing education, to ensure that you keep up with changes in your occupational field.
What is permit
Although similar to a license, a permit carries a subtle difference and is somewhat narrower. While a license offers a broad privilege to carry on a particular occupation or business, a permit is a grant of permission to do a particular thing.
For example, while you may be licensed to work as a building contractor anywhere in the State of California, if you want to construct a building in San Luis Obispo County, you are going to have to obtain a permit from the county before you can do so.
You may have provided sufficient proof to the State of California that you are competent to build something, but you are now going to have to prove to San Luis Obispo County that the particular building you want to construct meets the county’s zoning and other requirements.
Once you do, the county will issue a building permit granting you permission to construct the building. You will find that your county has similar requirements.
Cities also require permits to conduct certain activities within their borders. For example, if you are an attorney, while you may be licensed to practice law anywhere in your state, if you want to open a law office, you are going to have to obtain a business permit from the city in which your office will be located.
If you plan to operate a secretarial service out of your home, you will have to obtain a permit to operate a home-based business. Business permits are often called business licenses or tax certificates, but whatever they are called, the purpose is the same to grant you permission to conduct business within the city limits, to ensure that your business is properly zoned and regulated, and most significantly, to provide a method for the city to collect appropriate taxes from your business.
Even after you have obtained your business permit, additional permitting may be required for your business. For example, if you are offering goods for sale, you will also have to obtain a seller’s permit. If you hold certain promotional events for your business, such as a parking lot sale or a block party, you may be required to first obtain a special event permit.
If your business is in the foodservice industry, you are going to have to obtain a permit from the health department in order to ensure that food is being stored, prepared, and served in a safe manner and environment.
But what if you want to operate a very simple, small-scale business? What if you don’t even need an office? Say, for example, that you and your friend Margie dream of operating a snow-cone stand at the beach someday, going to work in cut-off shorts and bikini tops, and generally living a simple, uncomplicated life.
Well, in that case, you may not be required to finish school or pass a test, but you will be required to obtain a street vendor’s permit in most cities, perhaps a business permit and/or seller’s permit, and probably a health department permit as well. Believe me, no matter what your business dream is, some sort of permit will be required before you can make that dream come true.
So, before embarking on your business venture, be very sure that you know what the zoning, licensing, and permitting requirements are for your particular occupation or business, as well as for the city and county in which you intend to engage in your business.
There may be severe monetary and even criminal penalties for failing to comply with these requirements. In addition, depending on your occupation, failure to comply with licensing requirements may result in the suspension of your license and your inability to carry on your business in the future.