Operating license is one of the most important administrative authorizations for the regular exercise of business activities. Issued by the municipality, this document confirms that the company is authorized to operate at a specific address and that the establishment meets the applicable urban planning, health, and safety requirements.

Although it is a widely known concept, the process for obtaining a permit usually involves various administrative steps, in addition to analysis by different public bodies. For this reason, municipal licensing often becomes one of the most sensitive aspects of opening or regularizing businesses.

What is an operating license?

The operating license is a municipal authorization that allows the exercise of an economic activity in a specific property. The license confirms that the company complies with local regulations related to land use, safety, public health and urban impact.

Since these rules are defined primarily by municipal legislation, the procedure for obtaining a license can vary significantly between cities. In larger municipalities, the process tends to be more detailed and involve different stages of administrative analysis.

Types of permits and licensing models

Depending on the municipality and the activity performed, licensing can take different forms, including:

• Provisional permit: issued while other necessary licenses are still under review; and
• Final permit: granted after full verification of legal requirements;
• Permit for temporary events: issued for events, fairs or temporary shows in public or private spaces;
• Low-risk permit: issued when the activity does not require prior inspection before the start of operations;
• High-risk permit: required for establishments with a high potential for danger to safety, the environment, or health; and
• supplementary licenses related to the activity, such as health, environmental or safety permits.

In certain situations, municipalities may grant provisional authorizations based on licenses previously granted to the property, this occurs when a company begins to occupy space within an already licensed establishment.

The licensing process and the agencies involved

In practice, the application for an operating license rarely depends on just one single agency. In many municipalities, the process involves technical input from different sectors of the public administration, such as:

• health surveillance, when the activity involves food, health, or the handling of sensitive products;
• environmental agencies, depending on the potential impact of the activity;
• municipal urban planning authorities, responsible for controlling land use; and
• fire department, which analyzes fire safety conditions.

This multiple processing steps explain why, in some cities, the process of obtaining the permit can take months — or even more than a year — to complete.

The attempt at simplification introduced by the Economic Freedom Act.

With the aim of reducing bureaucracy in the business environment, Law No. 13.874/2019 was edited, known as Economic Freedom Law. Among other measures, the legislation established the possibility of waiving the requirement for a prior permit for activities classified as low risk., allowing the company to begin operations upon self-declaration.

In practice, however, the application of these measures depends on the regulations of each municipality. In some cities, especially in larger urban centers, licensing remains a relatively complex procedure subject to various administrative analyses.

This multiple processing steps explain why, in some cities, the process of obtaining the permit can take months — or even more than a year — to complete.

Companies that operate solely on an order form

Given the delays in processing applications, it is common for companies to begin operations equipped only with the operating license application form. This practice reflects an administrative reality in many municipalities, where the volume of requests and limited public resources prolong the processing of applications.

However, it is important to point out that the application form does not legally replace the permit. The form does not guarantee complete protection against potential administrative measures.

Consequences of not having an operating license

The absence of a permit can lead to relevant administrative sanctions, as the municipality has the authority to oversee the exercise of economic activities within its territory, these activities include:

• administrative fines;
• closure of the establishment; and
• embargo on business activities.

For this reason, municipal licensing is usually one of the first concerns in the legal and operational organization of a company.

Business licensing requires planning

Although often treated merely as a bureaucratic step in opening a business, the operating license is an important element of business compliance. The licensing process may involve different public bodies, technical requirements, and administrative deadlines that vary depending on the municipality and the nature of the activity performed.

PLBrasil Paralegal monitors processes related to licensing and regulation of business activities, analyzing not only the process of obtaining an operating license, but also other administrative authorizations that may impact the proper exercise of economic activities.