What is the importance of licensing in a small business that is well established and has been for several years?

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Longevity is certainly a good criterion for trusting a business, but many potential new customers like to see the “official” approval from regulatory forces that a license represents.  A plumber, for example, who has built up a reputation over the years in a neighborhood, may want to expand to a nearby town; the license signifies that he has kept up with the latest technology (gone from lead/copper pipe to PVC technology, for example), that he is in good standing with his fellow-specialists, and that his reputation is something more than just a “good old boy” network.  In terms of updating his tax status, too, from a loose personal income form to an S-Corp tax system, his license can assure government agencies that he is not taking jobs “under the table” to avoid taxes.  The license allows him, too, to join professional organizations that promote and protect the occupation.  Finally, with several online suppliers, proof of a license is required to get the wholesale price.  Finally in social situations, there is some prestige in being able to say “I am a licensed ……” when new acquaintances ask about your personal life.