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Can a Felon Own a Business?

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Felons who finish their incarceration often apply for jobs in areas they have worked in before.  Some attempt to find something in a different field, requiring more education or learning new skills.

There are resources available for them to find employment.

Some may want to take a different route and look into a business of their own.

This blog post will address the issue of whether a felon can own a business.

  • What is a Business?
  • An Opportunity for Felons?
  • Operating a Franchise
  • Starting a Business
  • Business License
  • Supporting a Felon in Owning a Business


What is a Business?

A business is an organization (large or small) that conducts activities by producing or selling a good or service.

While some businesses are non-profit, most operate as a for-profit business.

The most common business structure is a sole proprietorship. Some businesses operate as a partnership or may be set up as a corporation.  There is also a limited liability company (LLC) which combines the benefits of a corporation and a partnership.

An Opportunity for Felons?

There is no Federal or state law preventing a felon from owning a business.

A felon may be prohibited from owning some based on the type of business and the requirements for licensing.

Licensing and bonding can be affected by a felony.  A felon may not be able to obtain a surety bond, which is a type of insurance policy to protect customers.

A surety bond is typically required for a plumber, contractor, mortgage provider, and auto dealer in many states.

It is essential for a felon to talk with an attorney for advice on how to proceed with owning a business.

There are two ways for a felon to own a business.

Operating a Franchise

The first is to buy a business.

Some might want to pursue a franchise which involves a license to own and operate an individual store or restaurant.  This is a business purchased from a company.

Companies offering franchises are mostly concerned with an individual’s credit standing.  They also look at the applicant’s business knowledge, previous business experience, and other qualities for success.

A credit check will be done.  A criminal background check is also likely if the company runs background checks on the employees they hire.

Some states permit a felon to obtain a Certificate of Relief From Disabilities.  This is a court document granted by a judge requesting a licensing board to consider a felon’s complete history and circumstances of their crime and actions since their conviction.

When looking at credit rating, many felons have faced financial losses resulting in lowered credit standing.  When seeking a franchise, it may be difficult to be approved as a result and lead to problems getting financing.

So it is important to be honest about their conviction because to have an offense show up later would bring up questions about integrity and character.

Starting a Business

Thousands of businesses start every year.  Of all businesses in the U.S., 99.7% are small businesses for a total of 28 million.  About 2/3 of new businesses only last two years, and just half survive five years.

So it is essential to follow the steps to give themselves the best chance to make it.

This begins by selecting a business in which they already have experience.

They will already have knowledge about the industry and have skills necessary to be successful with this type of business.

For example, someone who has worked in the construction industry and wants to start a small remodeling business will have an advantage because of their training and experience in construction work.

For someone considering a business in a particular area, if they do not have experience it would be helpful for them to work for a while in that field before opening a business in that area.

This would give them the opportunity to learn whether or not this field would interest them enough to consider starting a business in that field.

If this is not something they would enjoy, they would know to choose another area.

While working in this field, it will be possible to determine how successful a business in an area might be based on their experience.

The more one knows a field when starting a business the better able they will be to evaluate their business plan.

The next step in starting a business is to decide if this will be a one-owner business or whether they will have a partner.

Then they will have to think of a name for their business and register it with the county clerk where they reside.

Often the success of the business depends on its location.  It is essential to find an area in which the business would have its best chance to make a profit.

Business License

The majority of businesses need some type of license and permit from federal and state agencies.  Those required depend on the type of business, location, and laws in that state.

A federal license is necessary for any business with activities regulated by a federal agency like businesses in agriculture, alcohol, and firearms.

A state license depends on the type of business and location, which may include construction, restaurants, and some retail operations.

Contacting the state in which a felon will reside and operate a business is recommended to understand particular licensing requirements.

There are several reasons why a business license is necessary:

  • To identify a business and ensure accountability for its operation
  • To protect the public’s health and safety
  • To maintain finances for tax purposes

It is essential to maintain any required license to avoid penalties and protect the business.  Not having a license can result penalties and even having the business closed.

For example, a license is usually necessary for a bank, liquor store, and a daycare.  These are businesses that a felon would not be able to operate as a result of their offense.

They could not own a business dealing with firearms while a felon with a financial crime could not own a business involving financial services.

Supporting a Felon in Owning a Business

For families of felons who want to own a business, support them in achieving their goal.

Be honest with them about the importance of this as part of their commitment to putting their criminal life behind them.

Remind them that not everyone is suited to owning a business.

For those who decide to pursue this goal, following the guidelines in owning a business is important.  Encourage them to consult an attorney to make certain they follow the laws regarding licensing.

For any felon wanting to own a business, having their record expunged can make a difference.

Be there for them and help them achieve this.

So what do you think about this blog post about whether a felon can own a business?  Have you or someone you know been in this situation?  What was that like and were they successful?  Please tell us in the comments below.

3 thoughts on “Can a Felon Own a Business?”

  1. I’ve been researching for days about starting a heavy duty leaf spring rebuild and repair shop in Ms and you took the worry off of my shoulders.thank you


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