Starting a successful advertising agency takes more than knowing how to write a catchy jingle.
The question, “what business license do I need to start my business” is a common one, but in reality, a business will often need multiple licenses, permits, and registrations in order to operate legally.
Related: Guide to starting an advertising agency
To not miss any important licenses and permits, we recommend also checking with your local Chamber of Commerce, economic development agency, or use a business license service like Incfile or LegalZoom.
What Licenses Do You Need to Start an Advertising Agency?
Truth in Advertising Laws
While not a license, it’s vitally important that an advertising agency is familiar with truth in advertising laws. Through truth in advertising laws, the Federal Trade Commission (FTC) holds advertisers accountable for the ads they create and ensure they are not deceptive. In particular, the:
- Advertising must be truthful and non-deceptive
- Advertisers must have evidence to back up their claims; and
- Advertisements cannot be unfair.
Learn more about truth in advertising laws
Most states and towns/cities don’t have specific licensing for an ad agency; however, they all have licensing requirements for starting a business. Here are a few of the common licenses and permits for an advertising agency:
General Business License or Permit
Depending on where the business is located, a general business license or permit may be required. A few states require a business license; however, they are more commonly found at the city level.
Learn more: Business license requirements by state
Federal Employer Identification Number
The Federal Employer Identification Number (also referred to as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a unique nine-digit number that identifies a business with the Internal Revenue Service (IRS).
Any business with employees or those that form as a partnership, Corporation, and in many cases an LLC, the business will need to get an EIN.
Learn: How to get an EIN
Sales Tax Permit or Number
In order to sell products and/or offer certain services, a state sales tax permit (or tax ID number) may be needed. This permit creates an account number with the state’s Department of Revenue or a similarly named taxing agency.
Additionally, hiring employees will also likely require a state tax number.
Learn: How to get a sales tax permit
Resale Certificate
When buying products such as promotional items to sell to customers, the business can purchase these items tax-free. A resale certificate allows a business to purchase inventory, and instead of paying the sales tax to their vendor, they charge the sales tax to the end-user of the product.
A resale certificate only allows a business to not pay sales tax for items being resold, and sales tax will still need to be paid for supplies or equipment.
Learn: How to get a resale certificate
Certificate of Occupancy
In most communities, a business will need to secure a Certificate of Occupancy (CO) before opening. This certificate is typically obtained from the city, but sometimes from the county, and allows a business to occupy and operate from a building provided the building complies with zoning regulations, building codes, and any other local requirements.
A Certificate of Occupancy is also sometimes required for a home-based business.
Business Name Registration or DBA
While not necessarily a business license, it’s worth noting that in order to use a name for a business, many states require the registration of that name. Making matters more complicated, the process of name registration is different by state and the type of business entity.
For instance, sole proprietorships and partnerships generally need to register a business name (also referred to as a Doing Business As, DBA, fictitious name, or assumed name).
Learn: How to register a DBA
Corporations and LLCs register are a little easier in that their name is registered when forming the entity.
Related: What is the difference between a sole proprietorship, partnership, Corporation, or LLC?