Many business owners can be understandably confused by the differences between business licenses and business formation. While business formation sets up the structure and legal foundation for your business, business licenses give you the right to operate under certain conditions.
One common example of a business license that most people are familiar with is a liquor license. A liquor license doesn’t create a business structure, it only licenses your business to sell wine , beer, or mixed drinks to customers. The licensing process simply makes it possible for governments to enforce laws regarding the service that would otherwise be difficult to police.