What Are Business Licenses?
While you may not have heard of a "business license" by name, you are most likely familiar with the concept. A business license is an agreement with the government that allows you to operate a business in a specific jurisdiction, usually a city or county. Cities and counties require businesses to be licensed for several reasons, the most important being taxation. Business licenses are a way for local governments to make sure they get their cut of the taxes. For example, if your clients or customers come from within the city limits, the city may want to make sure you are paying their sales tax and other city-imposed fees. Additionally, business licenses also ensure businesses are compliant with the zoning laws of the jurisdiction in which they operate. Zoning laws govern whether a particular location can be used for a commercial purpose (such as an animal hospital or restaurant) or is for residential use (a place where people live such as a house or condo). Zoning laws can specify what types of businesses may operate at one location , which is why it is crucial to do your research before signing a lease. There are a few different ways you can obtain a business license. Most municipalities use a one-stop shop where you can fill out your application, usually online, and pay the fee electronically. Depending on the type of license, you may have to have your business inspected by several different city departments (like health department or fire department). Other times you must contact each of the departments separately, like when you are operating a restaurant which involves both health department and liquor license approval. Most business licenses expire after one year, like a car registration, and you must renew them every year.
Legal Issues for Felons
Felons are often asked to jump through a range of hoops that increase in number and intensity relative to the severity of the underlying offense. Felons attempting to reintegrate into society may be ensnared in a complicated statutory web that complicates otherwise straightforward processes like obtaining a business license. The challenges are all the more frustrating because felons who successfully reintegrate into society, unlike those who don’t, are less likely to commit new crimes and are much more likely to find employment, avoid recidivism and contribute positively to their communities. Yet some lawmakers remain sympathetic to the idea that people who have committed more serious crimes should be less free than other people to run businesses.
Past crimes are not considered relevant character issues by many professional licensing authorities but it’s clear that a person’s past can have an important impact on future chances for success. Individuals with adverse criminal records are especially likely to encounter obstacles when applying for occupational and business licenses. In these circumstances, licensees often find that the hard work they do to earn a reputation in the community is threatened by a past that cannot be changed. The community often judges them by their past rather than how they have served it during the years after they paid their debt.
Some jurisdictions impose mandatory waiting periods on applicants with particular convictions, meaning that some businesses are closed to felons unless they decide to wait months or years to reopen an old business or start a new one. Even after the waiting period has expired, it’s possible that the applicant will be denied any or all of the licenses that will be needed to operate the proposed business.
Though it’s difficult to understand how a person who has served their sentence in prison or jail and become rehabilitated could continue to pose a greater threat to public safety or society than someone who has never been imprisoned, many individuals with past criminal records remain ineligible or only conditionally eligible to work legally in specific fields.
State-Specific Rules
As discussed above, some states are less restrictive than others in granting business licenses to convicted felons. At the other end of the spectrum are a handful of states that are extremely limiting, and one or two that even disallow felons to apply for a business license. In between are those states whose licensing requirements vary by specific types of businesses. Below is a summary of how each state approaches the issue of who can hold a business license.
Alabama – Felons are ineligible for a business license if the conviction relates to a "poor moral character" issue, such as gambling, extortion, bribery, violation of the state’s medical or professional licensure acts (such as fraudulent billing or unethical conduct), felony tax evasion or theft. A determination by the Alabama Board of Licensure for Professional Engineers and Land Surveyors that an applicant lacks good character is not a disqualifier for obtaining a business license. For all other purposes, Alabama does not generally prohibit a convicted felons from obtaining a business license unless it is one of the types described above.
Alaska – No restriction for any businesses.
Arizona – Arizona restricts some types of businesses, such as liquor stores, taxi drivers, insurance companies, money transfer services, private security companies and banks, but does not restrict other types of businesses, such as grocery stores, spa and health clubs, gyms and fitness trainers, mortgage brokers or even "adult entertainment establishments," except to the extent that sex offenders are prohibited from working in certain types of places where minors may be present.
Arkansas – No restriction for any businesses.
Colorado – Colorado prohibits career, occupational, or professional licenses to any applicants who have been convicted of a felony against a person, including a sexual offense. Other types of felonies do not result in a license denial.
Florida – Florida prohibits most business licenses to felons but has a waiver process through the state’s Office of Executive Clemency.
Illinois – Illinois bars certain types of companies and professions from obtaining licenses if an owner has been convicted of a felony. This includes liquor stores, restaurants, debt adjusting firms, medical equipment or supply firms, title insurance agents and disability management and vocational rehabilitation firms.
Iowa – Individuals with felony and certain misdemeanor convictions are ineligible for a business license.
Kansas – Kansas has no restrictions on the type of business a convicted felon can operate, but bars individuals with a felony conviction from working at, or being an owner, of any public or private school, child care facility, license-exempt child care facility, early childhood program or entity that provides or contracts for the provision of transportation services for children.
Kentucky – Certain professions, including private investigators, real estate brokers, real estate sales persons and out-of-state pharmacists, require a "certificate of good standing" from the state’s government for a person to be licensed.
Maine – No restriction for any business.
Mississippi – Individuals with felony convictions for theft, robbery, burglary, larceny, rape, sexual battery or exploitation of a child are ineligible to apply for a business license.
Nebraska – Felons are excluded from holds various occupations. These include, but are not limited to: bail bond agents, automobile recyclers, funeral directors and embalmers, barbers and cosmetologists, tattoo artists or piercers, real estate brokers and salespersons, loan agencies, collection agencies, debt counseling centers, collection agency managers, tattoo removal businesses and exotic animal breeders.
Oklahoma – Convicted felons are barred from starting or continuing to function as a business while they are under a sentence involving confinement.
South Carolina – Convicted felons are barred from starting or continuing to function as a business while they are under a sentence involving confinement.
South Dakota – South Dakota restricts most businesses from hiring individuals with felony convictions. Some exceptions exist for those who have received a pardon.
Tennessee – Tennessee restricts various businesses from employing individuals with felony convictions. Some exceptions exist for those who have received a pardon.
Texas – Only a few types of businesses are restricted, but they are strictly prohibited. These include: for-profit private security companies, private security guards and private investigation firms.
Vermont – No bars to any business with a felony conviction.
Virginia – Convicted felons are barred from starting or continuing to function as a business while they are under a sentence involving confinement.
Tips for Felons to Secure Business Licenses
While this guide is not intended to be a detailed list of steps for felons to take to obtain business licenses, there are several strategies that may help felons in their efforts to pursue a business license. The first strategy is to contact a business licensing expert for assistance, as every state handles business licenses differently. An expert can review the details of your case, help you determine eligibility to apply for a business license and whether there are any restrictions, and assist you with the completion and submission of your application.
Second, if you are having difficulty obtaining a business license, consider seeking help from a local nonprofit or nonprofit that helps business owners with criminal records obtain business licenses. There may be a number of legal services that will advocate for your right to obtain a license in addition to being able to apply for one despite your felony conviction.
A third strategy is to simply contact your local government office responsible for issuing business licenses to see what the requirements are and whether or not you may be eligible to receive a license. In some cases , your local government may specifically allow individuals with felony records to apply for a business license. It’s often best to be upfront about your record so that you can be sure to receive accurate information about the process.
Finally, it’s important to understand your legal rights throughout the process so that you can advocate for yourself or have an advocate fight on your behalf. If you are wrongly denied a business license or the process has taken unreasonably long, you should seek the help of an attorney who can help you take legal action to have the situation rectified.
In closing, there is no universal answer to the question of whether or not a felon can obtain a business license, but by following the strategies outlined above you can increase your chances of getting a license and successfully opening your own business.
Business Ventures of Successful Felons
It is essential that we all remember there are many successful business owners who happen to be felons. This is not a license to break the law. But it is important to recognize that mistakes that qualify as good faith mistakes should not keep someone from obtaining a license. Most licensing agencies impose temporary restrictions that will expire after a defined period, such as five years. It is very important that individuals in this situation make sure they understand the terms of the license after the restrictions lift.
Several examples can be found on the SBA’s website of entrepreneurs who more than likely had a good faith mistake who have gone on to run successful businesses. These are not drug dealers or people who have used the laws to their advantage in a nefarious way. These are people who did not understand the law or their obligations under the law. The SBA website is http://www.sba.gov/content/success-stories-felons. One example of a felon who got into trouble and moved on to success is a man accused of committing credit card fraud to pay for his sick wife’s medical treatment. While he was concerned about doing the right thing and got caught up in a difficult situation, he now runs his own successful construction company. A second example of a person who runs several photography and hair salons who was convicted of aggravated robbery and kidnapping. While it is not really clear in the article how someone could serve time for robbery and kidnapping and still go on to run several successful business, it does appear that it was a matter of not understanding the legal meaning of the word "aggravated" and misstating the facts on his application. The third case is of a man who convicted of a felony charge relating to children in the Illinois Department of Children and Family Services (IDCF) he could not find work in his field of expertise. He then turned into business. Now he operates a nonprofit organization that focuses on assisting families in crisis. He not only owns the organization, but he also was able to break into the corporate market and trains corporate executives on the impact of drugs on children and their families. He also handles some cases for the Department of Human Services. These success stories demonstrate that people can recover from setbacks and operate successful businesses, which is something that people who are responsible for regulating licenses should keep in mind.
Wrapping Up
The path to entrepreneurship has many bends and twists, but it has been shown time and again that a past felony conviction does not have to be one of those detours. We have seen that felons have to jump through a few extra hoops in many instances, but the challenge has often been worth it. We have all heard stories about how people have overcome great challenges and have continued to move forward unfazed. While it may not always be easy, the stories of tenacity and resilience that we have shared with you, highlight a way forward for felons who want to become business owners. Many successful entrepreneurs have had to traverse the path of rejection before success , and you may very well be on that path as you read this.
It is important to remember that other successful business owners, such as well-known athletes, actors, business tycoons and politicians have had to overcome struggle and adversity while growing their businesses. You are in good company when you face and struggle with the possibility of rejection. While it is easy to become weighed down with thoughts of rejection, we must remember that success will come if the desire is strong enough to motivate you to persist. A way forward, a door to opportunity, is waiting for you if you have the confidence to continue your journey.