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What Is A Business License And How To Get One

License Acquisition
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Let’s begin with the basics: What is a business license? A business license is a legal permit issued by a government authority that allows individuals or companies to operate legally within a specific jurisdiction.

But why does it matter, and how do you obtain one? In this article, we’ll answer these questions and guide you through the process of getting your own business license. So, if you’re curious about the ins and outs of business licensing, you’re in the right place.

What is a Business License?

man filling out an application

A business license is a formal document or permit issued by a government authority that grants an individual or entity the legal right to conduct business within a specific jurisdiction. It serves as proof that the business complies with local, state, and federal regulations, allowing it to operate legally.

Business licenses can take various forms, including a physical certificate or a digital document, depending on the issuing authority and region. These licenses typically include important information such as the business’s name, address, type of business, and the expiration date of the license.

The primary purposes of a business license are as follows:

  1. Regulation and Compliance: Business licenses help governments regulate various aspects of commerce, including taxation, public safety, and zoning. They ensure that businesses adhere to local laws and regulations.
  2. Revenue Generation: Governments often charge fees for issuing business licenses, which can contribute to municipal revenue.
  3. Consumer Protection: Business licenses may require businesses to adhere to specific quality and safety standards, providing a level of protection for consumers.
  4. Identification: A business license allows the public to identify legitimate businesses and helps build trust between businesses and consumers.

It’s important to note that the requirements and processes for obtaining a business license can vary significantly depending on the type of business, location, and the specific regulations in place. In the sections that follow, we will explore why obtaining a business license is essential and provide guidance on how to obtain one for your venture.

The Significance of Business Licenses

A calendar with pins

Obtaining a business license is not just a bureaucratic formality; it holds significant importance for entrepreneurs and business owners. Here are some key reasons why business licenses are significant:

  1. Legal Compliance: Perhaps the most crucial aspect of a business license is that it ensures your business operates within the boundaries of the law. Operating without the necessary licenses can result in fines, penalties, and legal consequences that can cripple your business.
  2. Credibility and Trust: Having a valid business license enhances your credibility and builds trust with customers, partners, and investors. It signals that your business is legitimate and adheres to government regulations.
  3. Consumer Protection: Business licenses often require compliance with safety and quality standards. This protects consumers from subpar or unsafe products and services, contributing to overall consumer confidence.
  4. Access to Resources: Many banks, lenders, and investors require proof of a valid business license before providing financial support. It opens doors to funding opportunities that can fuel your business growth.
  5. Permit and Zoning Compliance: Depending on your location and type of business, zoning and permit regulations may apply. A business license can help demonstrate that your business complies with these requirements.
  6. Taxation and Reporting: Business licenses are linked to taxation. Having one ensures that you are properly registered for tax purposes, making tax reporting and payment more straightforward.
  7. Avoiding Legal Consequences: Operating without a business license can lead to legal troubles, including lawsuits and fines. It’s a proactive step to avoid costly legal battles.
  8. Avoiding Business Closure: Failure to obtain a necessary business license can result in your business being shut down or facing legal injunctions, disrupting operations and revenue.

In essence, a business license is not just a piece of paper; it’s a critical component of responsible and ethical business practices. It signifies your commitment to compliance, consumer protection, and the overall success and sustainability of your venture.

Types of Business Licenses

understanding sign

General Business Licenses

General business licenses, also known as basic business licenses or operational licenses, are the most common type of business licenses issued by local governments. These licenses are often required for almost all types of businesses and serve as a foundational permit for legal operation.

Key Features of General Business Licenses:

  1. Broad Applicability: General business licenses are typically applicable to a wide range of business types, from retail stores and restaurants to service providers and consultants.
  2. Local Jurisdiction: These licenses are issued at the local or municipal level, meaning that the requirements and fees can vary from one city or county to another.
  3. Renewal: General business licenses usually require periodic renewal, often annually. Renewal ensures that the business continues to comply with current regulations.
  4. Regulatory Compliance: Obtaining a general business license may involve meeting various regulatory requirements, such as zoning regulations and health and safety standards.
  5. Fees: Businesses are typically required to pay an initial application fee and an annual renewal fee to maintain their general business license.
  6. Public Record: General business licenses are often a matter of public record, meaning that information about the business, including its name and address, is available to the public.

It’s important to note that while general business licenses are widespread, certain industries or business activities may require additional specialized licenses or permits. In the following sections, we’ll explore some of these specialized licenses, depending on the nature of your business. Obtaining the appropriate licenses ensures that your business operates legally and avoids potential legal issues.

Professional Licenses

Professional licenses are a category of business licenses that pertain to individuals or businesses engaged in specialized professions or services that require a high level of expertise or certification. These licenses are typically governed by state or professional licensing boards and are crucial for maintaining professional standards and protecting public health and safety.

Key Features of Professional Licenses:

  1. Industry Specific: Professional licenses are specific to certain industries or professions, such as doctors, lawyers, accountants, architects, and cosmetologists.
  2. State Regulation: These licenses are often regulated at the state level and may require individuals to meet state-specific educational, training, and examination requirements.
  3. Continuing Education: Many professional licenses mandate ongoing education and professional development to ensure that license holders stay current in their field.
  4. Ethical Standards: License holders are generally held to high ethical standards and may be subject to disciplinary actions for violations.
  5. Consumer Protection: Professional licenses provide a level of consumer protection by ensuring that practitioners are qualified and meet established standards.
  6. Licensing Boards: Each profession often has its own licensing board or regulatory agency responsible for overseeing the licensing process and enforcing regulations.

Obtaining a professional license is a critical step for individuals and businesses engaged in specialized professions. It demonstrates competence, adherence to ethical standards, and a commitment to ensuring the well-being of clients and the public. Failure to obtain and maintain the necessary professional licenses can result in legal consequences and damage to one’s professional reputation.

Sales Tax Licenses

Sales tax licenses, also known as seller’s permits or sales and use tax permits, are essential for businesses engaged in retail sales of tangible goods. These licenses grant businesses the legal authority to collect and remit sales taxes on behalf of the government. Sales tax revenue is a crucial source of income for state and local governments, funding various public services and infrastructure.

Key Features of Sales Tax Licenses:

  1. Required for Retail Sales: Businesses that sell physical products directly to consumers typically need a sales tax license. This includes brick-and-mortar retailers, e-commerce stores, and vendors at trade shows or events.
  2. State and Local Jurisdiction: Sales tax licenses are issued at both the state and local levels. Businesses must typically register with the appropriate state agency and may also need permits from local taxing authorities.
  3. Tax Collection and Remittance: With a sales tax license, businesses are responsible for collecting sales tax from customers at the point of sale and remitting it to the relevant tax authorities on a regular basis.
  4. Tax Exemptions: Depending on the jurisdiction and the nature of the products sold, some sales may be exempt from sales tax. Businesses need to understand these exemptions and apply them correctly.
  5. Record Keeping: License holders are usually required to maintain detailed records of sales transactions and tax collected to facilitate reporting and audits.
  6. Penalties for Non-Compliance: Failure to obtain and maintain a sales tax license or incorrect collection and remittance of sales tax can result in fines, penalties, and legal consequences.

Sales tax licenses are crucial for businesses involved in the sale of physical goods. Complying with sales tax regulations ensures that businesses contribute to their communities and avoid costly legal issues. The specific requirements and processes for obtaining a sales tax license vary by state and locality, so it’s essential to research and follow the guidelines applicable to your business location.

Federal Business Licenses

In addition to state and local licenses, some businesses may require federal business licenses or permits to operate legally, especially if they engage in specific activities regulated by federal agencies. These federal licenses are typically tied to industries with high-level regulatory oversight or national security implications.

Key Features of Federal Business Licenses:

  1. Industry-Specific: Federal licenses are often industry-specific and may apply to sectors such as aviation, firearms, pharmaceuticals, telecommunications, and broadcasting.
  2. Regulated by Federal Agencies: These licenses are administered and regulated by federal agencies, each with its own set of rules, requirements, and application processes.
  3. National Scope: Federal licenses are applicable across the entire country, ensuring uniform compliance with federal regulations.
  4. Security and Safety: Certain federal licenses, such as those related to firearms or aviation, are designed to ensure safety, security, and regulatory compliance.
  5. Complex Application Process: Due to the complexity of federal regulations, the application process for federal licenses can be intricate and time-consuming.
  6. Ongoing Compliance: Businesses holding federal licenses must adhere to federal regulations continuously, including periodic reporting and compliance checks.

Examples of federal business licenses include Federal Firearms Licenses (FFLs) issued by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), and licenses for broadcasting issued by the Federal Communications Commission (FCC).

It’s important for businesses in regulated industries to be aware of federal licensing requirements and to obtain the necessary federal licenses to operate legally. Failing to do so can result in fines, penalties, and legal consequences from federal authorities.

Special Licenses or Permits

In addition to general business licenses, professional licenses, sales tax licenses, and federal business licenses, there are often specialized licenses or permits that businesses may require, depending on their activities or locations. These special licenses or permits cater to specific industries, services, or situations and are typically issued by the relevant regulatory authorities.

Key Features of Special Licenses or Permits:

  1. Niche Requirements: Special licenses or permits are tailored to address unique needs, such as environmental regulations, health and safety standards, or event-specific requirements.
  2. Temporary or Event-Based: Some permits are temporary and event-specific, allowing businesses to engage in activities like hosting festivals, fairs, or exhibitions.
  3. Industry Focus: Industries such as food service, construction, healthcare, and transportation often have specialized permits or licenses that address sector-specific regulations.
  4. Local Variations: The need for special licenses or permits can vary by location, with local governments imposing additional requirements beyond state or federal mandates.
  5. Compliance with Regulations: These licenses ensure that businesses comply with specific regulations designed to safeguard public health, safety, and the environment.

Examples of special licenses or permits include food service permits for restaurants, environmental permits for businesses handling hazardous materials, health permits for healthcare providers, and building permits for construction projects.

Navigating the landscape of special licenses or permits can be complex, as the requirements vary widely depending on factors such as location, industry, and the nature of the activity. Businesses must research and understand the specific licenses or permits relevant to their operations and obtain them to ensure legal compliance and avoid regulatory issues.

Do You Need a Business License?

Determining whether you need a business license is a critical step in the early stages of starting a business. While the specific requirements can vary based on your location, industry, and business activities, here are some general guidelines to help you assess whether you need a business license:

  1. Business Location: The requirements for business licenses are often tied to your business’s physical location. If you operate your business from a commercial space or home-based office, you may need a license.
  2. Business Type: Consider the nature of your business. Are you selling products, offering services, or engaging in professional activities? Different business types may have distinct licensing requirements.
  3. Local Regulations: Research the regulations specific to your city or county. Local governments often have their own sets of rules and licensing requirements for businesses operating within their jurisdictions.
  4. Industry Regulations: Certain industries, such as healthcare, food service, construction, and transportation, may have industry-specific licensing requirements imposed by state or federal agencies.
  5. Sales Tax Collection: If your business involves selling physical products, you may need a sales tax license to collect and remit sales tax to the appropriate authorities.
  6. Professional Licensing: If you or your employees are engaged in professions that require specialized training or certification (e.g., doctors, lawyers, electricians), professional licenses may be necessary.
  7. Event-Specific Activities: If your business participates in events, trade shows, or temporary activities, you may need special event permits or licenses.
  8. Home-Based Business: Even home-based businesses may require licenses, depending on local zoning regulations and the type of business conducted.
  9. Federal Licensing: Some businesses engaged in specific activities, such as firearms sales or broadcasting, may require federal licenses or permits.
  10. Environmental and Health Permits: Businesses dealing with environmental hazards or health-related activities (e.g., restaurants) may need additional permits to ensure public safety.

To determine your specific licensing requirements, it’s advisable to:

  • Contact your local city or county government offices to inquire about local business licenses.
  • Research state-level licensing requirements and regulations, especially if you operate across multiple jurisdictions.
  • Explore federal licensing requirements if your business activities fall under federal oversight.

Obtaining the necessary licenses ensures that your business operates within the boundaries of the law, avoids potential legal issues, and establishes trust with customers and partners. Failure to obtain required licenses can result in fines, penalties, and business disruptions. Therefore, it’s essential to thoroughly research and comply with licensing regulations relevant to your business.

Where to Get a Business License

Once you’ve determined that your business requires a license, the next step is to understand where and how to obtain it. The process can vary depending on your location and the type of license you need. Here are common avenues for obtaining a business license:

  1. Local Government Offices: Many business licenses are issued at the local or municipal level. Contact your city or county government offices or visit their websites to inquire about the specific requirements and application process for local business licenses.
  2. State Agencies: Some states centralize the licensing process and have dedicated agencies or departments responsible for business licensing. Visit your state’s official website or contact the relevant state agency for guidance.
  3. Online Resources: Some jurisdictions offer online portals where you can apply for and manage your business license. Online applications can streamline the process and provide access to resources and information.
  4. Professional Associations: If your business requires professional licensing (e.g., for healthcare providers, attorneys, or architects), reach out to the appropriate professional association or board for information on licensing requirements and procedures.
  5. Federal Agencies: If your business activities fall under federal jurisdiction, such as firearms sales or broadcasting, you may need to apply for federal licenses or permits. Contact the relevant federal agency, such as the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) or the Federal Communications Commission (FCC), for guidance.
  6. Consultation Services: Some regions offer business consultation services or chambers of commerce that can guide you through the licensing process and provide resources for new businesses.
  7. Legal Counsel: In complex cases or if you’re unsure about the requirements, consider consulting with legal professionals who specialize in business law. They can provide tailored advice and assist with the application process.

When applying for a business license, you will likely need to provide information about your business, such as its name, address, ownership details, and the nature of your activities. Be prepared to pay application fees, which can vary widely based on location and the type of license.

It’s essential to follow the specific procedures outlined by the issuing authority and ensure that all required documentation is complete and accurate. Obtaining a business license is a crucial step in legitimizing your business and ensuring legal compliance, so take the process seriously and seek guidance if needed.

How to Get a Business License

Obtaining a business license involves a series of steps that may vary based on your location and the type of business you operate. Here is a general guide on how to get a business license:

  1. Determine License Requirements:
    • Identify the specific type of business license you need based on your industry, location, and business activities.
    • Determine whether you need a local, state, or federal license, or a combination of these.
  2. Research Local Regulations:
    • Contact your local city or county government offices to inquire about local business license requirements.
    • Visit their websites or consult with local business associations for additional information.
  3. State Licensing Agencies:
    • If your state requires business licensing, contact the relevant state agency responsible for business licenses.
    • Check their website for application forms, guidelines, and any state-specific regulations.
  4. Federal Licensing Agencies:
    • If your business activities are subject to federal regulations, contact the relevant federal agency.
    • Visit their website to access federal license applications and requirements.
  5. Complete Application Forms:
    • Obtain the necessary application forms, which may be available online or in person at local government offices or agency websites.
    • Fill out the forms accurately and completely, providing all required information.
  6. Gather Supporting Documents:
    • Gather any supporting documents or attachments requested, such as proof of identity, business ownership, or lease agreements.
  7. Pay Application Fees:
    • Be prepared to pay the required application fees. Fees can vary widely depending on the type of license and jurisdiction.
  8. Submit Application:
    • Submit your completed application and supporting documents to the appropriate licensing authority.
    • Ensure that you meet any deadlines and follow submission guidelines.
  9. Wait for Approval:
    • After submitting your application, it may take some time for the licensing authority to review and process it.
    • Be patient and prepared to respond to any additional requests for information.
  10. Receive Your License:
    • Once your application is approved, you will receive your business license. This could be a physical certificate or a digital document.
  11. Display Your License:
    • If required, prominently display your business license at your place of business, where customers and authorities can easily see it.
  12. Renew Your License:
    • Be aware of the license renewal requirements, including renewal fees and deadlines. Failure to renew can result in the suspension of your license.
  13. Compliance and Record Keeping:
    • Ensure ongoing compliance with all licensing regulations, including record-keeping requirements.
    • Keep copies of your license and any related documents for your records.

It’s essential to follow the specific procedures and requirements outlined by the issuing authority to ensure a smooth application process. Additionally, consult with local business associations, chambers of commerce, or legal professionals if you have questions or need assistance with the licensing process. Obtaining and maintaining a business license is a fundamental step in establishing and operating a legal and legitimate business.

Costs and Processing Time

The costs associated with obtaining a business license and the processing time can vary significantly depending on several factors, including your location, the type of business you operate, and the specific licensing requirements. Here’s what you need to know about costs and processing time:

1. Application Fees: Most business licenses require the payment of application fees. These fees can vary widely, from a nominal amount to several hundred dollars or more. The exact cost depends on your location and the type of license you need.

2. Renewal Fees: In addition to initial application fees, many licenses also involve annual or periodic renewal fees. It’s essential to budget for these ongoing expenses to maintain your license.

3. Local vs. State vs. Federal: The cost of obtaining a business license can differ based on whether it’s a local, state, or federal license. Local licenses are typically more affordable, while federal licenses may involve higher fees.

4. Additional Costs: Depending on your business type and location, you may incur additional costs, such as fees for background checks, inspections, or compliance with specific regulations.

Processing Time:

The processing time for obtaining a business license can also vary widely:

  • Local Licenses: Local licenses often have shorter processing times and may be issued within a few weeks or even days.
  • State Licenses: State licenses may have longer processing times, ranging from several weeks to a few months, depending on the complexity of the application and the state’s regulatory processes.
  • Federal Licenses: Federal licenses generally involve more extensive reviews and can take several months to process.

Expedited Processing: Some jurisdictions offer expedited processing for an additional fee, which can significantly reduce the waiting time for your license.

Factors Affecting Processing Time:

Several factors can influence how long it takes to obtain a business license:

  1. Completeness of Application: Ensuring that your application is complete and accurate can expedite the processing time. Incomplete or incorrect applications may result in delays.
  2. Application Volume: High application volumes or peak periods can lead to longer processing times, especially at the local and state levels.
  3. Type of License: Some licenses require more extensive background checks or regulatory reviews, leading to longer processing times.
  4. Location: The efficiency and workload of the local or state licensing office can vary by location, impacting processing times.
  5. Regulatory Changes: Changes in regulations or unexpected events (e.g., the COVID-19 pandemic) can affect processing times.

To minimize delays, it’s advisable to start the licensing process well in advance of your planned business launch date. Additionally, keep a close eye on deadlines for license renewals to avoid potential interruptions in your business operations. Consulting with local government agencies or chambers of commerce can provide insights into the specific costs and processing times for your business license.

Ensuring Business Compliance

Obtaining a business license is a crucial step in ensuring compliance with local, state, and federal regulations. However, compliance goes beyond acquiring the license itself. Here are key aspects to consider in ensuring ongoing business compliance:

1. Renewal and Maintenance:

  • Stay vigilant about license renewal dates and ensure that you pay renewal fees promptly. Failing to renew on time can result in the suspension of your license.

2. Record Keeping:

  • Maintain accurate records related to your business license, including copies of the license certificate and any correspondence with licensing authorities. Proper record keeping aids in audits and compliance checks.

3. Adherence to Regulations:

  • Understand and adhere to all regulations associated with your business license. This includes compliance with zoning laws, safety standards, health codes, and any industry-specific regulations.

4. Tax Compliance:

  • If your business collects and remits sales tax or other taxes, ensure timely and accurate tax reporting and payment. Non-compliance with tax regulations can lead to penalties.

5. Employee Compliance:

  • If you have employees, comply with labor laws, including wage and hour regulations, workplace safety standards, and employment tax requirements.

6. Environmental Compliance:

  • If your business involves environmental considerations (e.g., waste disposal, emissions), adhere to environmental regulations to minimize environmental impact and avoid fines.

7. Health and Safety:

  • Ensure that your business premises and operations adhere to health and safety standards to protect both employees and customers.

8. License Display:

  • Display your business license prominently at your place of business as required by local regulations. This demonstrates your commitment to compliance.

9. Ongoing Education:

  • Stay informed about any changes in regulations or industry standards that may affect your business. Continuous education and training can help you remain compliant.

10. Compliance Audits:

  • Be prepared for periodic compliance audits or inspections by local or state authorities. Having organized records and a clear understanding of your compliance responsibilities will ease this process.

11. Legal Counsel:

  • In complex regulatory environments or if you have questions about compliance, consider seeking legal counsel or consulting with industry experts to ensure adherence to all applicable laws.

12. Ethical Business Practices:

  • Operating ethically and responsibly is a fundamental aspect of compliance. Uphold high ethical standards in all your business dealings to maintain a positive reputation and avoid legal issues.

Non-compliance with regulations can lead to fines, legal action, and reputational damage. It’s essential to view compliance as an ongoing commitment and invest the necessary time and resources to stay in good standing with regulatory authorities. This proactive approach not only ensures your business operates legally but also contributes to its long-term success and sustainability.

Wrapping Up

In this comprehensive guide, you’ve learned about the importance of business licenses, the various types of licenses, and how to obtain them. You’ve also gained insights into the costs, processing times, and the critical aspect of ensuring ongoing compliance with regulations. As you wrap up your journey toward obtaining and maintaining a business license, here are some key takeaways:

  1. Legal Foundation: A business license serves as a legal foundation for your business, ensuring that you operate within the boundaries of the law.
  2. Trust and Credibility: Holding a valid business license enhances your credibility and builds trust with customers, partners, and investors.
  3. Compliance is Key: Compliance with regulations, including zoning, safety, and industry-specific standards, is essential for maintaining your license and avoiding legal issues.
  4. Record Keeping: Keep accurate records of your business license, renewals, and compliance efforts to facilitate audits and regulatory checks.
  5. Ongoing Education: Stay informed about changes in regulations and industry standards to adapt your business practices accordingly.
  6. Ethical Business Practices: Uphold high ethical standards in all your business dealings, contributing to your reputation and compliance efforts.
  7. Consultation: Seek guidance from local government agencies, chambers of commerce, and legal professionals when navigating the licensing process.

Remember that obtaining a business license is not just a one-time task; it’s an ongoing commitment to legal compliance and ethical business conduct. By adhering to regulations, maintaining your license, and operating responsibly, you set a solid foundation for your business’s success and long-term sustainability. As you move forward, continue to prioritize compliance as an integral part of your business operations.

Frequently Asked Questions

Do I need a business license in Missouri?

  • Whether you need a business license in Missouri depends on your location, business type, and activities. Some cities and counties in Missouri require business licenses, while others do not. It’s essential to check with your local government or city hall to determine the specific requirements for your area.

How much is a business license in the state of Missouri?

  • Business license fees in Missouri can vary significantly based on your location and business type. Fees may range from a nominal amount to several hundred dollars. To get an accurate estimate of the cost, contact your local government or city authorities for detailed fee information.

What license is best for a small business?

  • The most suitable license for a small business depends on factors such as your business type, location, and industry. Common licenses for small businesses include general business licenses, professional licenses (if applicable), and sales tax permits. The best license for your business will align with its specific needs and regulatory requirements.

Does Ohio require a business license?

  • Ohio, like Missouri, has varying business license requirements based on location and business activities. Some cities and municipalities in Ohio require business licenses, while others do not. It’s crucial to check with your local government or city authorities to determine if a business license is necessary for your specific situation.

How much does a business license cost in Ohio?

  • The cost of a business license in Ohio can vary widely depending on your location and business type. Fees may range from modest amounts to more substantial charges. To obtain accurate information about the cost, contact your local government or city authorities for specific fee details.

How do you obtain a business license in Ohio?

  • To obtain a business license in Ohio, follow these general steps:
    1. Determine your local licensing requirements by contacting your city or county government.
    2. Complete the necessary application forms and provide any required documentation.
    3. Pay the applicable fees.
    4. Submit your application to the relevant licensing authority.
    5. Comply with any additional requirements or inspections.
    6. Once approved, you will receive your business license.

Do I have to register my small business in Ohio?

  • Yes, you may need to register your small business in Ohio, depending on the structure and activities of your business. Registering with the Ohio Secretary of State is often necessary for entities like LLCs and corporations. Additionally, you may need to register for state taxes and obtain any required permits or licenses.

How long does it take to get a business license in Ohio?

  • The processing time for obtaining a business license in Ohio can vary depending on the specific requirements of your locality and the type of license needed. Some licenses may be issued relatively quickly, while others may take several weeks or months to process. Contact your local government or city authorities for estimated processing times.

How much is an LLC license in Ohio?

  • Ohio does not have a specific “LLC license” fee. Instead, LLCs in Ohio are required to pay a filing fee when registering with the Ohio Secretary of State. The filing fee can vary depending on the type of LLC and other factors. For the most accurate and up-to-date fee information, visit the Ohio Secretary of State’s website or consult with legal professionals.

Featured Image Credit: Photo by Bermix Studio; Unsplash – Thank you!

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