As a practicing or prospective business owner, nobody you know can deny that you have experience and expertise in the field(s) you work in. But how can you communicate your qualifications to people—potential clients, partners, employees—you don’t know? You need some form of documentation to do so, and that’s where licensure and certification come in handy.
While certification and licensure are similar, there are some important differences between them to consider as you start up or maintain your small business. This guide will walk you through some of the most important considerations, such as:
- Definitions of licensure and certification
- Key differences between the two
- Other requirements for running a business
Let’s do this.
Licensure and certification defined
Simply put, licensure and certification have to do with documentation of your education, training practice, and overall ability to perform. They designate you as capable to do your job, per standards met through programs or tests.
They are often expected, if not required, of anyone who practices specific crafts or offers certain services or goods for sale.
With that said, here’s a substantial definition for each term:
Certification – Official documentation of your competence in some capacity, whether a specific skill, branch of knowledge, or profession.
- Generally obtained from educational institutions, with or without governmental oversight.
- Sometimes required to practice specific trades, but not working within a profession in a general sense.
Licensure – Legal documentation of your knowledge of and ability to perform an individual skill.
- Generally obtained from or overseen by government institutions or agencies (federal, state, and local levels).
- Often legally required for administering certain practices (law, medicine, etc.) or working within a given profession (transportation, agriculture, etc.)
- Often legally required for manufacturing, selling, or generally dealing with particular materials (firearms, alcohol, etc.).
Now, let’s think about how to differentiate the two.
What's the difference between certification and licensure?
As you can see, these credential terms are pretty similar in regards to what they mean and do. In fact, sometimes they are used interchangeably, along with words like “documentation” or “registration.”
However, it’s important to pay careful attention to what specific language pertains to your own business.
Differences, effects, and requirements
You may need both certification and licensure, either one or the other, or neither.
A big part of the licensure definition has to do with legal matters.
When contrasting certification vs licensure, the biggest differences come down to what’s required, legally or otherwise, and what each enables you to do.
Some relevant areas where they differ, include:
- Federal and state requirements (licensure) – Certain professions and trades require licensure at the federal, state, and/or local levels. To obtain a professional license, a state board or national board will approve successful completion of what is required.
- Industry standards (both, either) – Whether legally required or not, some industries have established norms and standards that necessitate licensure, certification, or some combination of the two.
- Institution-specific standards (certification) – Outside of legal requirements, certain institutions and companies have standard expectations for certification that determine trade, hiring, promotion, and other business processes.
- Naming your services (either) – In the absence of legal requirements and professional standards, licensure or certification may be an important face-value difference between whether a client trusts your services or not. You’d typically choose one or the other, depending on norms and demand.
Generally speaking, both licensure and certification are about approval. Each form of documentation shows you’ve been vetted.
It’s a lot like paying credit where credit is due, just as an official document.
Overall, certification and licensure are most similar in that they’re two versions of the same thing —documentation that you are able to perform your work competently. They’re also two versions of a requirement you might need to meet to run your business, depending on what industry you’re in.
But they’re not the only requirement…
In order to run your small business legally and efficiently, there are other things you need to have in place besides licensure or certification, regardless of whether you are a specialized counselor, nurse practitioner, or social worker. What exactly you need depends on what kind of small business you’re running, but some things that all business need to set up are:
- Business structure – While you might start out without a business structure, you need to set up a limited liability company (LLC) or corporation to separate and protect both your personal and business assets. There are other structures you can choose from as well, but an S-Corp and an LLC are amongst the most common.
- Registration – You’ll also need to register your business name at the state level, and maybe a trademark at the federal level. And you’ll certainly want a domain name for your web location. You may also need to register a tax identification number.
- Taxes – Of course, your business needs to pay taxes. Unless you’re a single-member LLC, you’ll need to get an Employer Identification Number (EIN). The EIN will enable you to hire employees and open a bank account, as well as pay taxes separately from your own personal finances.
- Insurance – Finally, you need insurance. Depending on your profession and state, certain kinds of insurance might be legally required for your business. But regardless of what’s required, all businesses should have insurance to protect against inevitable risks of daily operations.
For that last point in particular, we’re here to help.
Licensed, certified, or not: cover all your bases
You might need an important piece of paper to practice business. Or, you might not. It all depends on your profession and industry.
While we can’t get you licensed to do your job, Thimble can get you a Certificate of Insurance in no time.
By clicking on “Get a Quote” or downloading the Thimble app, you can answer a few quick questions and sign up for a policy in under 60 seconds. We offer general liability insurance and professional liability insurance policies to protect your business from third-party claims of:
- Bodily injury
- Personal and advertising injury
- Property damage
- Professional negligence
It’s insurance that works when you do. Our policies are custom tailored to your needs, so you can purchase insurance by the hour, day, or month.
As a small business owner, your mission is to deliver quality goods and services to your clients. Here at Thimble, our mission is helping you do that by simplifying the insurance process—from understanding it to securing the coverage you need.
Whether you need a license or certification to run your business, be sure to make sure that all your bases are covered. Once you’re set with whatever documentation you need, you’re ready to get all your other essentials together and start (or continue) providing your wonderful services to all your amazing clients.
We’re rooting for you.
Our editorial content is intended for informational purposes only and is not written by a licensed insurance agent. Terms and conditions for rate and coverage may vary by class of business and state.