Starting a successful bike rental business takes more than knowing how to keep your bike fleet running smoothly. One important aspect of successfully starting a business is researching and applying for the licenses and permits that are needed to operate legally.
The question, “what business license do I need to start my business” is a common one, but in reality, a business will often need multiple licenses, permits, and registrations from federal, state, and local agencies.
Related: Guide to starting a bike rental business
To not miss any important licenses and permits, we recommend also checking with your local Chamber of Commerce, economic development agency, or use a business license service like Incfile or Corpnet.
What Licenses Do You Need to Start a Bike Rental Business?
Local Licenses
While states don’t have specific licensing for a bicycle rental business, some cities do.
A few examples include:
Mackinac Island, Michigan requires a Rental Bicycle License for any business renting bicycles within city limits.
In Newport, Rhode Island, bicycle rental agencies are required to obtain a license.
A Bicycle Rental License is required for businesses in Ocean City, Maryland as well.
Not every city is going to require licensing specific to bicycle rental shops. However, there will likely be general licensing requirements to start any business. Here are a few of the common licenses and permits that a bike rental business may need:
General Business License or Permit
Depending on where the business is located, a general business license or permit may be required. A few states require a business license; however, they are more commonly found at the city level.
Learn more: Business license requirements by state
Business Name Registration
While not necessarily a business license, it’s worth noting that in order to use a name for a business, many states require the registration of that name. Making matters more complicated, the process of name registration is different by state and the type of business entity.
For instance, sole proprietorships and partnerships generally need to register a business name (also referred to as a Doing Business As, DBA, fictitious name, or assumed name).
Learn: How to register a DBA
Corporations and LLCs register are a little easier in that their name is registered when forming the entity.
Related: What is the difference between a sole proprietorship, partnership, Corporation, or LLC?
Federal Employer Identification Number
The Federal Employer Identification Number (also referred to as a FEIN, Employer Identification Number, EIN, or Federal Tax ID Number) is a unique nine-digit number that identifies a business with the Internal Revenue Service (IRS).
Any business with employees or those that form as a partnership, Corporation, and in many cases an LLC, the business will need to get an EIN.
Sole proprietors and single-owner LLCs without employees can instead use the owner’s social security number.
Learn: How to get an EIN
Sales Tax Permit or Number
In order to sell products and/or offer certain services, a state sales tax permit (or tax ID number) may be needed. This permit creates an account number with the state’s Department of Revenue or a similarly named state taxing agency.
Additionally, hiring employees will also likely require a state tax number.
Learn: How to get a sales tax permit
Resale Certificate
When buying products such as safety equipment, drinks, etc., to sell to customers, the business can purchase these items tax-free. A resale certificate (sometimes referred to as a seller’s permit) allows a business to purchase inventory, and instead of paying the sales tax to their vendor, they charge the sales tax to the end-user of the product.
A resale certificate only allows a business to not pay sales tax for items being resold, and sales tax will still need to be paid for bikes and supplies.
Learn: How to get a resale certificate
Certificate of Occupancy
In most communities, a retail business will need to secure a Certificate of Occupancy (CO) before opening. This certificate is typically obtained from the city, but sometimes from the county, and allows a business to occupy and operate from a building provided the building complies with zoning regulations, building codes, and any other local requirements.
Before starting your bike rental business, be sure to check with the local zoning department to ensure the business can legally operate out of the chosen location.
