Licensed to Sell

• By Donna Craighead
• 03/17/09

Stimulus money is pouring into all 50 states at the end of the month. There may be business opportunities for your company in places you’ve never sold before—which might also mean that you’re not yet eligible to sell there. The regulations for doing business and procurement (a fine but important distinction) in the states vary greatly from state to state. Here’s a quick look at some of the issues involved.

Doing Business

“Doing business” means simply that you are legally approved to conduct business of any kind in that state, from running a factory to installing telecommunications equipment to selling to schools. Some states require having a business license for the state; other states require a letter of recommendation from a state that has issued a license; other states do not require obtaining a license at all. Within a state, there can be different regulations for doing business depending on such factors as the type of business, minority status of the business, and whether the vendor is a resident of the state. Most states have a fee for registering as a business within a state.

That said, you don’t have to be licensed in a state if you work with licensed subcontractors who can conduct business on your behalf. For example, a telecom equipment company may work with a local business to sell and install its product.

Procurement

“Procurement” means that you have met any state requirements that enable educational institutions to buy from you. There may be states that don’t require a license to do business, but do have procurement regulations for selling to schools. As with licensing, procurement processes for vendors vary from state to state. Some states require registration, others suggest it, and still others have no registration process at all. Some states have centralized statewide purchasing while other states delegate purchasing to the county or local level. Large cities often have their own procurement processes that can be different from the state’s. Within a state, there can be different regulations for purchasing depending on such factors as the type of product, the cost of the product, and the licensing associated with certain products. Most states have modest fees under $100 for registering as a vendor. Some states require more money and some a yearly renewal.

Determining Vendor Requirements

Before doing business or selling in a specific state, vendors should know its requirements. This chart [PDF link] provides URLs for key government agencies that regulate business, as well as other pertinent information.