Advantages & Disadvantages of Licensing

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Licenses are required by many professions or to achieve various permissions to do something. Regulated by different bodies of business or government, licenses often require testing, applications and registrations. There are advantages to requiring licenses, both for the licensee and for consumers.

Most disadvantages of licenses involve complications or inconveniences caused for the person obtaining the license.

Types of Licenses

There are many types of licenses allowing an individual or a business to complete a certain task or function in compliance with local, state and federal regulations. Perhaps one of the first licenses to come to mind for most people are driver's licenses. Many occupations, such as teaching and medical careers, require licenses that often must be updated annually through various tests and other requirements. Some other licenses are fishing, real estate, banks, accountants, insurance, retail sales, alcohol, shipping, religious and many, many others. Most licenses for businesses and careers require the payment of fees and paperwork to document and register the license with the appropriate regulating body.

Advantages of Licensing for an Individual

For licenses such as driver's licenses, the benefits are obvious. Without a driver's license, you cannot legally drive a vehicle. Each state regulates the age and requirements necessary to apply for and receive a driver's license. Other types of licenses allow an individual to do something like hunt or fish. Without a license you could be fined or legal action taken against you if you commit an unlicensed act. For individuals in careers, licensing is sometimes a requirement to be allowed to practice that profession; for example, doctors are not allowed to practice medicine without a medical license and clergy are not allowed to perform marriages without a license. In some careers, licenses are not necessary to perform the job, but are required for promotion to higher positions within the specific occupational path, and for eligibility for salary increases. For example, accountants do not have to be certified public accountants to practice accounting.

Advantages of Licensing for Consumers or Others

Licenses protect consumers from fraudulent people or situations. A licensed real estate agent enables you to buy or sell property without personally knowing anything about either. A licensed accountant can be called to help you should you be audited by the Internal Revenue Service. If you used an unlicensed accountant, you're on your own. Licenses, such as beer and alcohol sales licenses, protect the consumer purchasing those products because distributors must purchase products from approved sources so the consumer is getting safe beverages. Teaching licenses ensure students are being taught by trained teachers. Medical licenses protect consumers from doctors who aren't qualified to practice medicine. Licenses, such as driver's licenses, protect members of society from other people who could be dangerously unaware of traffic laws.

Disadvantages of Licensing

The disadvantages of licensing typically relate to the person obtaining the license. Fees for obtaining and subsequently renewing licenses are sometimes high. Paperwork is often confusing. Tests to become licensed are often time-consuming, expensive and usually don't offer a refund of money if the person fails to pass the test or requirements. There may be stipulations attached to different licenses that must be followed exactly and according to a preset time schedule regardless of the life events experienced by a person. Failing to obtain a license or renewal can have costly monetary fines or job restrictions placed on the person allowing their license to lapse.