Starting a business: en­tre­pren­eur vs business owner

Before we look at the various business permits and licences a company may need to consider, it’s worth to develop an un­der­stand­ing of the dif­fer­ence between an en­tre­pren­eur and a business owner. An en­tre­pren­eur is similar to a business owner in that both commonly start a business by them­selves. But the main dif­fer­ence is that en­tre­pren­eurs often launch their busi­nesses based on an in­nov­at­ive idea or service. The term ori­gin­ates from the French “en­tre­pren­dre” which means “to undertake”. A good example is a person who develops a unique software product and attracts funding to launch a start-up. Business owners, on the other hand, could be anyone selling goods or services. A sole pro­pri­et­or selling used books on Amazon is a good example of a business owner. The element of risk can be smaller for business owners because their ideas have often been tried and tested. The risks can be higher for en­tre­pren­eurs, but so are the rewards.

One doesn’t exclude the other though. You could start out as a business owner, for example operating a café, and later turn it into a franchise, taking on an en­tre­pren­eur­i­al role.

But ir­re­spect­ive of the legal structure you choose, if you’re selling certain goods such as food, sup­ple­ments or alcohol, or provide services such as a day nursery, you must apply for a business licence.

Business permits are issued by gov­ern­ment au­thor­it­ies to ensure that business operators comply with local laws. Pro­ced­ures to secure them are outlined by HMRC or your local council authority. Im­port­antly, the gov­ern­ment has the right to shut down any business that is not compliant with the law, i.e. where a business owner fails to show a valid permit.

Not every company owner will need to apply for a business licence. If, for example, you’re a sole pro­pri­et­or providing digital design services, you won’t need a special permit to conduct your business. However, if, for example, you sell food sup­ple­ments, you need to register as a Food Business Operator in the UK because sup­ple­ments can po­ten­tially pose a risk to human health.

Certain types of busi­nesses will also be required to apply for a premises licence. These include venues that sell alcohol, provide en­ter­tain­ment (like cinemas or music venues) and any res­taur­ants selling food and drinks after 11pm. Brands can also register their trademark to licence it in the future.

Although licences and permits are very similar in nature, i.e. they give a business per­mis­sion to carry out a service or sell a certain product, there are subtle dif­fer­ences. A licence is a more general term and gives a licence holder per­mis­sion to carry out a certain intent. Licences can also be given to people with spe­cial­ist skills, for example, hairdress­ers or chefs usually need to qualify to obtain a licence to practice pro­fes­sion­ally. Permits, on the other hand, are related to safety standards. A res­taur­ant may need to obtain a permit to serve alcohol and food. Many busi­nesses will have to obtain both, for example, a beauty salon must apply for a health permit and employ licenced prac­ti­tion­ers. If your salon plans on playing music, you will also need a licence to play back­ground music. To safe-guard the premises, salon owners may wish to install CCTV, which means they also need to obtain a public sur­veil­lance licence.

Where your business activ­it­ies are overseen by the gov­ern­ment, you need to register for a business licence. In many cases, you will be required to comply with gov­ern­ment law and council reg­u­la­tions. You can search the UK gov­ern­ment’s licence finder to find out if your business activ­it­ies require a licence or permit.

These include detailed guidance on licences and permits required for busi­nesses and a breakdown of specific activ­it­ies that require separate licences.

As an example, let’s assume you’re launching a catering business. Firstly, you must register as a food business. The licence finder now allows you to add any of the following activ­it­ies to check for licences per­tain­ing to “catering services”:

• Handling more than 50 tonnes of packaging in 12 months
• Or­gan­ising ad hoc events
• Indoor and outdoor events with entrance fees
• Parking of vehicles in re­stric­ted zones
• Pro­cessing in­form­a­tion from in­di­vidu­als
• Selling alcohol
• Using CCTV
• Use live en­ter­tain­ment venues
• Utilise the Olympic Brand
• Cater for air industry

Let’s assume you select to organise ad hoc events, want to serve alcohol and use an en­ter­tain­ment venue, the licences and permits you would need to register for include a premises licence, a temporary event notice, a live music licence and a personal licence to sell alcohol.

Select business activ­it­ies that require a licence or permit, and cor­res­pond­ing au­thor­it­ies to obtain them from are shown in the table below.

In addition to gov­ern­ment permits and licences, you may need to require for permits to operate spe­cial­ist tools or register your premises. This is the case for special events, farmer’s markets, de­vel­op­ment projects and planning proposals, among others. For example, if you plan on making changes to property you own, you will need to apply for a permit from your city or local council.

Im­port­antly, it doesn’t matter whether you conduct your business from your home or outside of it. Business and pro­fes­sion­al licences are required depending on the type of activity your company carries out, not ne­ces­sar­ily its place of business. There are, however, special licences for your place of work, for example, food pro­cessors will need a special permit to verify they are operating under sanitary con­di­tions.

The cost of a business licence or permit depends on the type of licence you are applying for. Average business licensing costs can range from £0 to £15,000 and more. Alcohol licencing fees range from £300 to £500. Re­gis­ter­ing premises can cost up to £2,000. Meanwhile, a permit for a food operator can be obtained free of charge.

Many permits will also require renewal after a year or a set amount of time.

Ap­plic­a­tion pro­ced­ures will depend on the type of permit you’re applying for and whether you are pro­cessing your request online or offline. This will be largely dictated by the authority you’re applying to. Let’s look at an example.

Say you’re importing Swiss chocolate from Switzer­land to the UK to sell through your online business. Because Switzer­land is not part of the European Union, you will need to obtain approval from different agencies. You must take the following steps:

• Apply for approval to import the food products with the De­part­ment for En­vir­on­ment, Food & Rural Affairs.
• Notify the Border In­spec­tion Posts of the arrival of your foods which contain animal products (in this case the milk in the chocolate)
• You may be required to submit health cer­ti­fic­ates in advance, but this will depend on the type of product you are importing.
• The border authority will verify that the foods you’re importing are safe to consume. They may also take a sample from your chocolate and analyse it to ensure it is safe for eating.

Food products that fail these checks will not be allowed to enter the UK. The Food Standards Agency provides further in­form­a­tion on the topic.

When applying for a permit make sure to fill out all the required sections, submit any forms on deadline and pay all relevant fees. Otherwise, it may take longer for your request to be processed by the au­thor­it­ies.

Starting your own business is a chal­len­ging endeavour, but if you un­der­stand the in­di­vidu­al steps involved and are well-prepared, the process can often be a little more fric­tion­less.

Please note the legal dis­claim­er relating to this article.