Many companies will need to obtain a specific business licence before they can start trading. In this blog, we will explain the purpose of a business licence, consider the types of business which may require one, and provide some examples.
What is a business licence?
A business licence is an official permit that must be obtained to carry out certain types of business activity. Some business licences can be registered in the name of a company, but others are issued to specific individuals working for a business.
Different types of business licences are required depending on the nature of business activities. We highlight a few of the more common business licences below, from premises licences to street trading licences.
If a business licence is required, operating without one can lead to hefty penalties and even criminal convictions. So it is vital to find out if your business needs a licence before you start trading.
Who needs a business licence?
A wide range of businesses require a business licence to operate legitimately.
The most common types of licenced businesses are those which provide a service for the general public in a physical space, such as pubs and entertainment venues. Many businesses will require multiple licences, depending on the services they provide.
To find out if your business needs a licence, check out the licence finder tool on GOV.UK.
How do I get a business licence?
The method of applying for a business licence will generally differ according to the particular local authority. To find out how to apply, check the relevant council website for instructions.
Aside from official checks and processes, there will usually be an associated fee that may have to be paid annually. This ranges from less than £100 to in excess of £1,000.
Common types of business licence
Under the Licensing Act 2003, businesses that sell alcohol or provide licensable activities from a particular venue are required to obtain a premises licence from their local authority. This is one of the most common types of business licence.
A premises licence is required for any business which does any of the following from a specific venue:
- sells alcohol
- serves hot food and drinks between 11pm and 5am
- provides any of these forms of entertainment:
- theatrical performance
- showing a film
- indoor sporting event
- boxing or wrestling
- live music
- recorded music
- facilities for making music
- dancing facilities
A premises licence is still required if the activities are for charity. But there are some forms of entertainment which do not require a premises licence, including:
- educational or promotional films
- films shown as part of an exhibition in a museum or gallery
- incidental music – live or recorded
Personal licence to sell alcohol
Any alcohol sales within licenced premises must be authorised by a member of staff who holds a personal licence to sell alcohol. This essentially means that any establishment selling alcohol from a particular venue must have at least two business licences: a premises licence and a personal licence.
Any licenced premises must appoint a Designated Premises Supervisor (DPS). The DPS must hold a personal licence to sell alcohol.
Most businesses that play music within their premises will require a form of business licence pertaining to music, known as TheMusicLicence. This covers businesses which:
- Play recorded music in public or at their business. This includes playing background music from radio, CD or the internet.
- Stage live music events in public, such as a concert or music festival.
- Play live or recorded music in a theatre.
- Use sound recordings in a theatrical production.
TheMusicLicence is available from PPL PRS.
Any gambling venues are required to obtain several types of business licences. The first of these is a specific premises licence, which falls into five categories:
- casino premises licence
- bingo premises licence
- adult gaming centre premises licence
- family entertainment centre premises licence
- betting premises licence
The premises licence for gambling businesses – which is separate from the other more general premises licence – can be obtained from the relevant local authority.
Additional licences may need to be obtained from the Gambling Commission, including:
- an operating licence
- a personal management licence
- a personal functional licence
Temporary Events Notice
To hold an event with any licensable activities on unlicensed premises, it may be necessary to obtain a business licence known as a Temporary Event Notice (TEN).
The types of licensable activities for which a TEN is required include:
- selling alcohol
- serving alcohol to members of a private club
- providing entertainment, such as music, dancing or indoor sporting events
- serving hot food or drink between 11pm and 5am
A TEN may also be required for any licensable activity which is carried out on licenced premises but which exceeds the terms of the existing licence.
Anyone who wishes to run a market stall will need to obtain a street trading licence. This will normally be subject to various restrictions, such as hours and location of trade.
The fee for a street trading licence may vary depending upon the location within a city. There are generally two types of street trading licence: a temporary and permanent licence.
Another type of business licence related to street trading is a Pedlar’s Certificate, which allows someone to trade whilst on foot, e.g. selling their wares door to door.
Depending on the local authority, a Pedlar’s Certificate may allow someone to trade in the street without a stall. Unlike other types of business licences which generally need to be obtained from the relevant local council, a Pedlar’s Certificate is obtained from a local police station.
Taxis and private hire licensing
There are different types of business licences related to taxis and private hire services, which fall into the following categories:
- Driver – anyone who wants to drive a taxi or private hire vehicle (including an Uber) must apply for a specific licence from the relevant local authority. In London, Transport for London (TfL) handles licencing. Various checks may need to be carried out, including a medical examination and enhanced criminal records check.
- Vehicle – the vehicle itself needs to be licenced.
- Private hire operator – in addition to licencing drivers and vehicles, a business that operates private hire vehicles must obtain a separate business licence.
Residential property businesses will often rent out at least one house in multiple occupation (HMO). A HMO is defined as a single property that is rented out by at least three different people who are not from the same household. It includes at least some shared facilities such as a bathroom or kitchen.
A HMO licence is required in England and Wales in respect of any large HMOs. A property is defined as a large HMO if all of the following apply:
- it is rented to 5 or more people who form more than 1 household
- some or all tenants share toilet, bathroom or kitchen facilities
- at least 1 tenant pays rent (or their employer pays it for them)
Skips and scaffolding
Any skips, hippo bags and other skip bags which are placed on public land need a specific business licence from the local council, known as a skip permit. Skip hire companies are generally responsible for obtaining these permits.
A scaffolding or hoarding licence is needed to erect any scaffolding or hoardings on, or next to, a highway. The cost of this business licence will generally depend on the length of time the scaffolding or hoarding is required.