Licences and permits for small businesses explained

26 August 2020

Licences are one of the first things you should familiarise yourself with when starting your small business. Before you even begin trading, the necessary business licence applications have to be in place. Although not all businesses require a licence, there are a wide range of businesses in the UK that do. When it comes to legal box-ticking, there are a few licences that are industry-specific and are mandatory requirements as a result.

To better help you understand the types of business licences there are in the UK, and which licences you might want to consider before you start trading, we've compiled this guide to the key permits and licences required in some of the UK's biggest industries.


What is a business licence?

A business licence is an official permit issued by a government agency or affiliated body that allows an individual or a limited company to conduct particular business activities within that body's jurisdiction. The licences you may need to obtain in order to operate, depend largely on where in the country you're based and what it is you want your company to do.


fine dining restaurant


What business licences do I need for my business?

Before you set up a business in the UK, it's wise to always contact your local authority to find out if there are any area/industry-specific permits or zoning restrictions that could limit your activities. However, there are a few major licences that many businesses operating across all local authorities in the UK will need to be aware of before opening their doors.

For instance, anywhere that sells alcohol will need an alcohol licence, and if you’re in a building, you’ll need a premises licence too. Additionally, if you're operating any of the following businesses, you'll need a licence to do so:

  • Childcare
  • Dog breeding
  • Ear piercing
  • Gambling services
  • Taxi driver
  • Fitness coach/personal trainer
  • Pet shop owner
  • Credit and financial services
  • Security guard
  • Goods hauling (HGV)
  • Import and export
  • Food businesses
  • Tattoo parlour
  • Beauty salon


Looking at the last example in more detail, it's plain to see how much licences factor into running a business. If you're planning on having any media in your salon, you'll need either a TV licence, a licence to play music (in which case you'll need to get in touch with PPL PRS, the licensing body for music in the UK) or both. Want to have any extra security devices installed? You'll need a CCTV licence for that, while a street display licence requires – what else – a street display licence. And, perhaps, you'd like to serve alcohol to your customers as an extra treat? Only if your salon has a premises licence that lets you do that of course.


takeaway sign


There are also temporary licences to take into consideration. Say, for instance, you're opening a clothes shop and you want to hold an opening event at which you want to serve alcohol or put on some entertainment. You may need a temporary licence if you plan on doing either.


How to get a business licence in the UK

As we mentioned before, your first port of call when it comes to getting a business licence is to get in touch with your local authority, as small business licences are generally granted by these individual local authorities. However, certain other types of businesses require you to go through a professional licensing body like the DVLA, the Gambling Commission or the Financial Conduct Authority (FCA).

If you're unsure of what licence you need for your business, you can always use the government website's licence finder tool to help you out, pointing you to the correct point of contact so you can make your application. You'll also find further information and guidance on alcohol licences if that's what you require too.  


woman and daughter sitting on a step


Another exception to the local authority route comes with regards to childminding. If you're planning on running a childminding business, you'll need to apply for a licence from a specific governing body, which are split into the UK's component countries:

  • Ofsted in England
  • Care Inspectorate in Scotland
  • Care and Social Services Inspectorate in Wales
  • Department of Health, Social Services and Public Safety in Northern Ireland


How much does a business licence cost?

The cost of business licences varies depending on the type of licence you're applying for, as well as other factors. For instance, premises licences for alcohol in England and Wales are subject to an application fee, but that fee is also based on the rateable value of the venue you need such a licence for.

Individual local authorities set the cost for licences they provide, and as a result, the cost can differ depending on where your business is based. Your local authority will publish a list of its licence costs on its website.


Why do I need a business licence?

In some instances, business licences are needed for health and safety reasons. Every business has health and safety responsibilities, but the specific requirements may vary depending on the nature of your work and where it takes place.

frustrated young man reading document


Additionally, having the right licences in place can keep you in line legally, holding your business accountable for its actions and encouraging best practices in this regard. In terms of financing, too, they can help keep track of things for tax purposes.

Without the correct licence, you could be fined or imprisoned. And when you do have the relevant licence, you still need to obey its terms. If you do breach any of the terms of the licence, accidentally or otherwise, you can face fines, convictions and have your licence revoked, leaving you without the legal cover to carry out your business activities legally.

To keep your business legal, compliant and protected, the best thing to do is adhere to the rules stipulated by your business licences as closely as you can. They are designed to keep you and your customers safe and legal when carrying out your day-to-day business activities. It's imperative that you don't delay applying for them; the sooner you get them in place, the sooner you can open your doors and begin trading.

And if you're ever unsure what licences are the right ones for your business, don't hesitate to get in touch with your local council for more information.


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