Business & Professional Practice

Lesson 2 of 10

Licenses, identifiers, and insurance

Before opening, verify the requirements of your state, county, city, and professional regulator. A professional license is not necessarily the same as a business license, zoning approval, or permit. In the United States, an EIN is a federal tax identifier for eligible entities and other qualifying purposes; it does not replace state or local registrations. Insurance should match the services, setting, and risks of your work.

Key points

• Confirm renewal dates, continuing requirements, and display rules for each credential.
• Check zoning, occupancy, signage, and home-business rules before selecting a worksite.
• An EIN may be useful or required; a sole proprietor may have different federal identification needs.
• Professional liability or malpractice coverage addresses claims tied to professional services, subject to policy terms.
• General liability commonly addresses certain premises or operational injury and property claims.
• Disability coverage may replace some income; workers' compensation may be required for covered employees.

Key terms

Business license

Authorization required by a local or other government to operate a business.

Permit

Approval for a regulated activity, site, or use, as defined by the issuing authority.

EIN

Federal Employer Identification Number issued by the IRS for qualifying tax purposes.

Professional liability

Coverage that may respond to claims alleging harm from professional services.

General liability

Coverage commonly addressing specified third-party injury or property claims.

Workers' compensation

A state-regulated system of benefits and employer obligations for covered work injuries.