How to Get a Business License
If you're thinking about becoming a home-based small business owner, then you might need a business license.
New business owners have several tasks to complete before operation can begin. Whether starting a retail store or a home-based business, learn about state business license requirements. Besides a business license, you may need to register the business. Other licenses and permits might be necessary, like a federal license, to run the company.
The location where you conduct business is also a factor at play. The company type and profession also matter. Depending on the business activities, you may need additional licensing or special licensing.
With so much to consider, the best thing is to break down each item into manageable steps.
The right way to start is by learning about how to get a business license.
4 - Steps to Getting a Business License
Each state has its own requirements for obtaining a business license. It is not mandatory in all states for every type or business. These steps will help you determine if you require a license, and how to apply to your state to get one if you do.
Step 1 - Form Your Business Entity
A business license is required for your business name. Before applying for a license, it is a good idea to create a business structure. This will ensure that you do not have to reapply for or modify your business license later.
The following are common legal structures that small businesses can use:
- Sole Proprietorship - If you do not file paperwork to create any other type of business structure, a one-owner business will be considered sole proprietorship. Sole proprietors can take full responsibility for all business debts and obligations. They also report their business income as self-employment income when filing tax returns. You can choose to use a business name, such as Joe Jones or Affordable Lawn Care, if you are sole proprietor.
- General Partnership - For tax purposes, a general partnership is the same as a sole proprietorship. Partners divide up liability and personal assets don't get separated from the business. General partnerships may use the last names of partners as their business name. They may also have a dba.
- Limited Liability Company (LLC) - Simple business structure in which profits and losses are passed on to the owners for tax purposes. However, personal assets are protected against business liabilities (such as lawsuits or debts).
- Limited Liability Partnership (LLP) - Allow for a business structure where each partner has some liability protection and potential tax breaks.
- Corporation - A corporation protects personal assets against business liabilities. Corporations have a more stable operating structure, which may make them better at attracting outside investors.
- Nonprofit Corporation - Legal entity similar to a corporation. However, profits cannot be distributed to owners. Nonprofits may be exempt from tax.
When you file paperwork with your state, an LLC, corporation, or nonprofit corporation is created. You may be eligible for a DBA from your state. Or you might need to file it with your local government.
Step 2 - Apply for an Employer Tax Identification Number
Your state may require you to include your federal tax ID number with your application for a business license.
Solo proprietors without employees may use their Social Security Numbers as a tax ID number. However, all other businesses require a federal employer ID number (FEIN).
You can get an EIN online . It's easy and you will receive your number immediately.
Step 3 - Determine Which Licenses You Need
The type of business and the requirements for licenses are dependent on whether you have federal, state or local licensing requirements.
Here's how to find the licenses and permits that you require:
- The Secretary of State's office in your state, the Department of Revenue, or another agency that issues business licenses.
- You can find resources through your Small Business Administration office.
- Work with a lawyer for business to file and determine the required licenses.
Step 4 - Apply for a Business License
You might need to apply for permits and licenses with the state, county, or municipal agencies. This includes a sales tax permit from state, health permits through a department, and planning permits through the municipality.
You can find resources in your state and your local SBA office. This will save you time searching for the right agency, and you won't waste your time. You could find step-by-step guides for your state that will guide you through the process, and even links to various applications.
You can obtain a general business license online in most states as well as many localities. The application process for industry-specific licenses can be more complex.
Most likely, you won't need to wait for a sales tax permit or business operating license to be approved. Some types of permits and licenses may require a more lengthy and involved review.
What is a Business License?
A business license is when you get formal approval from a governmental agency to run a company in a certain jurisdiction. (In some cases, you may need permission from the local and federal government).
Some states may allow companies to have a license from the city, but not all. Other locations may request that you also have a general state license, but this is less common.
Avoid confusing the term “business license†with other registration types. Items like an occupational license and sales tax permit are different from a business license requirement.
It is also crucial not to misinterpret a legal business entity with a business license. (i.e., LLC). A business license permits you to engage in a specific type of business in a location. An LLC and other legal entities give your business legal recognition as an entity only.
It is not unusual for a company to need various licenses and permits. Yet, it mainly depends on geography and the type of business you run.
To operate a company in a particular location may require a federal business license and building permit. Business types that sell alcoholic beverages or firearms will need a liquor license or a federal firearms license. With each license or permit comes a filing fee attached.
Types of Business Licenses and Permits
It is important to determine what permits you will need before you get started to ensure you have everything you need. Here are some more permits and licenses you'll want to consider:
County Versus City Permits
You will need to know the jurisdiction your business will be in to determine what governing body you will seek permits from for your new business. While the type of permits required of you are usually universal from city to county, county permits tend to be less stringent and involved than city permits. Be sure to know whether or not you are within legal city limits.
A few jurisdictions require small business owners operating outside a town's legal city limits to get both city and county permits. In most cases, however, such business owners will just seek county permits instead of city permits.
Fire Department Permit
If your business is open to the public, involves large bodies of people congregating, and/or works with any type of flammable materials, then you'll certainly want to know both your jurisdiction's fire safety regulations and requirements and OSHA standards.
In most cases, jurisdictions will require a fire department permit before a business is allowed to operate. These may be broken down into specific sub-category permit types based on the business's operations, life safety needs, equipment, occupancy classification, and so forth.
Some jurisdictions may not issue permits at all; instead, they'll simply require you to submit to routine inspections to ensure your business meets with national and local fire safety regulations and laws. In other cases, you'll need both a permit and routine inspections.
It's important to know what fire safety measures are expected of your business to avoid costly citations and potential legal negligence lawsuits.
Air and Water Pollution Control Permit
In addition to federal and state EPA regulations, most jurisdictions now have a department devoted to air and water pollution control on a local level. You need to know how all three apply to your business's operations, including any construction phases.
There are a number of actions that may require you to seek local, state, and/or federal permits prior to and during the operation, such as burning waste, discharging anything into public waterways or sewer systems, and use of equipment and products that produce air pollutants.
Health Department Permit
Is your business a mobile food truck, coffee shop, bed and breakfast, bakery, restaurant? Or you might be starting another business that will involve selling food and drink items to either customers or other vendors. If so, you'll likely need a health department permit to operate.
Your local county health department will inspect your facilities and equipment before issuing the permit, and most will conduct yearly inspections for permit renewals and grading systems. While the specific regulations vary by state, health department permits are mainly concerned with cleanliness and safe food handling and practices.
Also, keep in mind that many states require food safety training and testing for all food service workers.
Health department permits also often pertain to products and services that touch or alter the human skin, such as tattoo parlors, nail salons, and certain beauty services.
Occupational Licenses Issued By The State
Depending on what type of business you're operating, you may need a special state occupational license to operate your business. Will you be doing business in a field that requires special training such as a doctor or accountant?
State licenses or occupational permits are issued at the state level to people in certain high-risk, high-skill occupations that provide personal services. Some examples of occupations that commonly require state occupational licenses include cosmetologists, nurses, doctors, therapists, real estate agents, contractors, inspectors, and auto mechanics. Your state licensing board can offer you a comprehensive list of occupations that require this license.
Having this license shows that you've completed any required training, education, and state board examination for your occupational field in that state. If you move, you'll likely need to apply for a new license in your new state. This is because most licenses are generally only valid in the state they are issued in. Certain occupations, such as nursing, might issue you a multi-state license that covers several specified states.
Unlicensed operators are subject to a number of legal fines and penalties. Under some state laws, practicing certain occupations without a license can even result in misdemeanor or felony criminal charges.
Federal Licenses And Permits
Most business operators aren't subject to federal business licensing and permits. The Federal Trade Commission offers a comprehensive list of the types of businesses that require a federal license or permit, including operating a TV station, radio station, investment advisory firm, meat preparation, drug manufacturing, alcohol and tobacco sales, and firearm sales.
Sales Tax License
Also called a certificate of resale or certificate of authority, a seller's permit enables you to legally collect sales tax on your retail revenue. Doing so in some states without the proper business licensing is a criminal offense.
Even if your business is home-based, you're legally required to pay sales tax on all sales of taxable goods and services. Keep in mind that many states consider both the parts and labor portions of a bill taxable. You'll need to check your individual state rulings on taxable services and goods to gather a precise definition.
Sales taxes can vary by both state and municipality at the retail level. Your state will offer a minimum sales tax, but your municipality may have a sales tax that exceeds the state-mandated amount, particularly for "tourist" area food, lodging, and entertainment offerings. So, it's very important to understand and collect the appropriate amount of sales tax required of you.
Signage Permit
Hanging your business sign is an exciting achievement for any small business owner. However, you'll often need to consider your local ordinances and permit needs during the design process.
Many jurisdictions have very strict regulations on the size, location, and lighting of outdoor business signs. It could be a costly mistake to have a sign made and then not be able to use it. Don't install it first and then get a fine.
Check first to ensure you are creating a sign you can actually use. Plus, don't forget to check if you need installation approval from your landlord first. Finally, be sure to find out if there are any city ordinances on what hours lighted signs can be turned on.
Wrap Up
To wrap everything up, there are many different facets included in getting your business license for your new business. Be sure to know exactly what you will need before you get started to save you from costly mistakes, or worse, fines.
From city zoning to fire permits, you will want to ensure that your business is legally in line and up to code. Do you need a special occupational license to operate your business? Find out now so that you can be sure to have everything you need when it comes time to launch your new business.
Business License Checklist
- Determine your business location and zoning
- Determine what permits you will need
- Determine your business structure and necessary licensing
- Determine the forms you will need to fill out
- Fill out all the forms you will need based on the above decisions
- File your forms with your correct zoning; city, county or state
- Pay your fees
Starting your own business can be an exciting new adventure. You don't want to see everything ruined because you didn't do your homework. There are plenty of resources available online for you to be sure that you have the correct licensing requirements.
The chamber of commerce is here to help you to start your new business. We want to see you succeed and have worked hard to gather all the information you will need. Hopefully, this article has helped you learn how to get a business license and start down the path to business ownership.
Business License FAQ
How much does a business license cost?
Do you need a business license?
Where to get a business license?
The process of getting a business license is easy and takes only a few steps to complete. Depending on your preference, you can go online to fill out a form with your business information or call your city or county office to go through the process. Once you provide your necessary details, the next step is to pay the business license fee.
How long does it take to get a business license?
To get a business license in the United States depends on your business type. Yet, the average time can take anywhere from a single day to six months.
What are some other business licenses and permits?
Since every state and city business rules, regulations, and fees vary, learn about some of the other most popular business registrations.
Other Business Licenses
Here are some items to consider:
Occupational and Professional Licensing
Occupational and professional licenses are not business licenses, but you may have to get them before offering any services. In some places, it is both a state and local requirement. Some states have a centralized agency overseeing professional licensing, while others have individual boards. It simply comes down to where you live. If your occupation or profession falls under any of the following business types, you will need licensing.
Business types that need occupational or professional licensing:
Accountants
Barbers
Businesses selling alcohol
Building Contractors
Teachers
Veterinarians
Lawyers
Land Surveyors
Doctors
Nurses
Counselors
Dentist
Psychiatrists
Massage Therapists
Cosmetologists
Manicurists
Pharmacists
Plumbing
Taxi Drivers
Electricians
Architect
Archivists
Biologist (Biological Scientist)
Chemist
Chiropractor
Whether you have a sole proprietorship or general partnership, you may need other permits and registrations. Along with getting a business license, you must also consider additional potential paperwork. Depending on the business, you may need to register employees, taxes, and other items.
Business Permits and Other Registrations
Here are a few items to consider:
Occupancy Permits
Sales Tax Permits
Resale Certificate
Federal Employer Identification Number (EIN)
Payroll Tax Registration
Tax Identification Number
Business Name Registration (Similar names include DBA, Assumed Business Name, Trade Name, or Fictitious Name.)
Why are there so many business licenses, permits, and tax registrations required?
Business owners have many tasks to handle, but each license, permit, and registration has a purpose.
The federal, state, and local governments request these items to:
Identify a business
Hold businesses accountable for their actions.
Fraud prevention
Public health and safety
Track business activities and taxes
Notify the public of impactful activities
Alabama Business License
AtlasAlabama is a website that helps small businesses start or expand in Alabama. Here you will find information about what businesses require occupational licenses and how to get a business tax number.
Get more information on Alabama Business Licenses.
Alaska Business License
Alaska's small business owners should consult the Alaska Department of Commerce for a detailed breakdown of what is required to license their business. It also has a list of businesses that do not require licenses in Alaska. Online renewals and filing for new licenses are easy.
Get more information on Alaska Business Licenses.
Arizona Business License
The Arizona Department of Revenue website has all the information you need about how to obtain a business license. This website was created to assist Arizona businesses in complying with basic licensing and tax requirements. This agency's licensing guide will show you where to find a state transaction prive tax, regulatory, professional, or special licensing or permits, as well as local business or occupational licenses and permits.
Get more information on Arizona Business Licenses.
Arkansas Business License
Arkansas.gov's Owning a Business website provides a complete guide to everything related to opening and running a legal business in Arkansas, including how to get a license. You will also find resources for registering a business, applying for an employer identification number and filing for workers' comp insurance.
Get more information on Arkansas Business Licenses.
California Business License
CalGold is your best resource for information about how to obtain a California business license. Select your county or city, then enter the type of your business and follow the steps.
Get more information on California Business Licenses.
Colorado Business License
Colorado Business Express is an online portal that small-business owners in the Centennial State can use to apply online for a business license.
Get more information on Colorado Business Licenses.
Connecticut Business License
Connecticut's New Business Checklist provides a step-by–step guide for small-business owners. If you only need to find out if your business requires special licenses or permits and where you can get one in Connecticut.
Get more information on Connecticut Business Licenses.
Delaware Business License
Go to the Delaware One Stop Business Registration website to register or renew your Delaware business license. This online portal will allow you to complete a questionnaire that will help you find the right forms to get the license you need.
Get more information on Delaware Business Licenses.
Florida Business License
The Florida Department of Business and Professional Regulation website has information about how to obtain a Florida business license. It also features an online portal for small-business licenses. Click on the business type you wish to register and follow the steps.
Get more information on Florida Business Licenses.
Georgia Business License
Online applications for Georgia business licenses are now available to many businesses. Check the state's online licensure application list to see if your business is included. You can then submit an online application to obtain a Georgia license. For a quick overview of your licensing requirements, take a look at Georgia's Business Licenses webpage.
Get more information on Georgia Business Licenses.
Hawaii Business License
The Business Express portal in Hawaii automates the process for registering your company online. You will need your eHawaii.gov information to register your business online. Next, answer the questions to determine which licenses or permits you require, and how to apply for any business licensing you may need.
Get more information on Hawaii Business Licenses.
Idaho Business License
To search for regulations and to apply online for licensing, permit and regulation information, visit Idaho.gov. Idaho does not have a state license. All business licenses are issued locally. Online applications can only be made by those businesses that require special licensing. For information about how to obtain a license for your business through local institutions, you can search Idaho.gov online.
Get more information on Idaho Business Licenses.
Illinois Business License
You're about to open a new Illinois business. Take a look at Illinois Department of Commerce's First Stop Business Info Center for resources on writing a business plan and setting up your legal structure. Registering your business is also possible. Find out how to obtain a license by using its registration, permit and application resources.
Get more information on Illinois Business Licenses.
Indiana Business License
Indiana does not have one comprehensive business license. However, every Indiana business will need to meet regulatory requirements at various state levels. Although it may seem complicated, the state's Business Owner Guide provides great online resources for licensing information.
Get more information on Indiana Business Licenses.
Iowa Business License
Iowa does not require general business licenses. License requirements in Iowa are determined by the nature of your profession or business. To determine the right licenses for your business, you can search the Iowa Business License Information Center Database.
Get more information on Iowa Business Licenses.
Kansas Business License
This guide will help you decide how to structure your Kansas business. For more information about obtaining a license in Kansas, visit the Kansas Business Center.
Get more information on Kansas Business Licenses.
Kentucky Business License
Kentucky does not have one license that applies to all businesses. However, certain businesses may require special permits or licenses. Visit the Kentucky One Stop Business Portal to learn more about starting or running your business. Also, visit their page on occupational permits and licenses that may apply to you.
Get more information on Kentucky Business Licenses.
Louisiana Business License
To begin the process of getting your state licenses, visit Louisiana's Business Services Page. To access GeauxBiz's startup services, you will need to create an account. This includes a checklist of business licenses.
Get more information on Louisiana Business Licenses.
Maine Business License
Maine's business licenses are administered at the local level. You will need to contact your town office to get information about your specific needs. For all the information you need, visit the Maine.gov Local Government portal.
Get more information on Maine Business Licenses.
Maryland Business License
Maryland Department of Commerce offers an online service that allows you to search for a business license in Maryland. You can also determine the license required to run your business. To find the right licensing agent for your industry, you can consult the Directory of Services of the Department of Labor, Licensing, and Regulation.
Get more information on Maryland Business Licenses.
Massachusetts Business License
For advice, resources, and information on the legal requirements to help you get your business started, take a look at Massachusetts's Starting a New Business Guide. To find out if your profession or business requires special licensing or permits in order to legally operate within the state, visit its Business Licenses & Permits page.
Get more information on Massachusetts Business Licenses.
Michigan Business License
Michigan does not require every business to be licensed. For certain occupations and vocations, business licenses may be required. Local governments may also require business licences. Use the online licensing search to find out if your venture may require a license or permit from the state. You can also check out the state's guidebook for a step-by-step outline on how to start your business in Michigan.
Get more information on Michigan Business Licenses.
Minnesota Business License
While some types of business may be allowed to operate in Minnesota without the need for special licenses or permits, others will require licensing and permits. To search for licenses required by topic, agency, or index in Minnesota you can use the Minnesota online license tool.
Get more information on Minnesota Business Licenses.
Mississippi Business License
Mississippi does not license all businesses at the state level. You might require state or local permits depending on the activities of your business to legally operate your business. For more information, visit the Mississippi secretary-of-state's website.
Get more information on Mississippi Business Licenses.
Missouri Business License
Missouri Business Portal allows you to register your company with both the Secretary of State and Department of Revenue simultaneously. You can also find a list of licensed occupations on this resource. For more information about licensing requirements in your area, it is a good idea to contact the county or municipal government.
Get more information on Missouri Business Licenses.
Montana Business License
Montana offers professional licensing as well as licenses to specific industries. All other business licensing is done at the local level in Montana. This list shows the Montana state licenses according to industry. Visit Montana's Small Business Development Center Network page for more information.
Get more information on Montana Business Licenses.
Nebraska Business License
The Nebraska Licensing Division supervises collection agencies and debt management agencies, credit service organizations, private detectives and truth and deception examers, as well as athletes agents and non-recourse civil lawsuit funding companies. Follow the links to obtain your required business license if your business involves any of these activities. No matter if your business does any of these activities, you should check with your local government and see if additional licenses are required.
Get more information on Nebraska Business Licenses.
Nevada Business License
SilverFlume Business Portal is a great resource for small-business owners in Nevada. This online portal provides a step-by–step guide for starting a business in Nevada. It also explains how to obtain the necessary business licenses in the state.
Get more information on Nevada Business Licenses.
New Hampshire Business License
To find out the requirements for running a business in New Hampshire, you will need to contact your nearest city or town clerk. Visit the New Hampshire Department of Revenue Administration licensing FAQ page for more information.
Get more information on New Hampshire Business Licenses.
New Jersey Business License
The New Jersey Business Action Center, an online resource for NJ business licenses, makes it easy to locate the permits and licenses you need. The New Jersey License and Certificate Guide is also available. This guide lists every type of business and occupation that requires permits, certifications, licensing or certifications. It also includes the contact information for the appropriate government agency.
Get more information on New Jersey Business Licenses.
New Mexico Business License
New Mexico's requirements for business licensing are different depending on where you live. It is best to get in touch with your local town clerk to find out more. Online applications for business licenses are possible if your business needs a permit or special license from the state. For more information about starting a business in New Mexico, take a look at this page by the New Mexico Economic Development.
Get more information on New Mexico Business Licenses.
New York Business License
You are trying to answer the question "How can I obtain a New York business license?" To determine the New York State licenses required to start your business, use the Business Wizard. You can also learn how to get the business license you need.
Get more information on New York Business Licenses.
North Carolina Business License
Although the State of North Carolina does not issue general business licenses it may be required for your business to meet state, city or county requirements. If your business requires occupational licensing, you may also need a special license. If you need personalized advice about how to obtain a license for your business, the state has business counselors you can call.
Get more information on North Carolina Business Licenses.
North Dakota Business License
You can find information about the licensing requirements for small businesses located in North Dakota on the North Dakota New Business Registration website.
Get more information on North Dakota Business Licenses.
Ohio Business License
The guide to starting your business in Ohio by the Ohio Small Business Development Center explains the legal structures involved in licensing. Every business must also register with the Ohio secretary.
Get more information on Ohio Business Licenses.
Oklahoma Business License
Oklahoma does not require general business licenses. However, there are certain industries that must be licensed to operate in the state. For a complete list of licensing requirements for Oklahoma, visit the Oklahoma Department of Commerce Business Licensing and Operating Requirements Page.
Get more information on Oklahoma Business Licenses.
Oregon Business License
For a specific state-specific plan for opening a business, visit the Oregon secretary of State's website on Starting a Business in Oregon. If you are only interested in finding out about Oregon's licenses, permits, and certifications, skip to step 6. It will direct you to Business Xpress License Directory which allows you to search for information about how to obtain a license in Oregon.
Get more information on Oregon Business Licenses.
Pennsylvania Business License
Pennsylvania's Bureau of Professional and Occupational Affairs offers an online portal for business licenses called the Pennsylvania Licensing System (or PALS). This allows you to apply for a license, renew an existing one, and take any other licensing actions you might need to run your business in Pennsylvania.
Get more information on Pennsylvania Business Licenses.
Rhode Island Business License
The Rhode Island Department of Business Regulation website has forms that can be used to obtain business licenses. You can search for license types according to industry and register online for a new or renewed license. To ensure you are following the legal steps for opening a Rhode Island business, make sure to check out the qualify to start a business page.
Get more information on Rhode Island Business Licenses.
South Carolina Business License
Although there is no one South Carolina state licensing requirement, almost all cities and towns require their own business licenses. To find out how to obtain a license for your particular business, visit the official website of South Carolina on licensing, permits and registration. South Carolina Business One Stop also offers information on how to start, run, expand, and do business in the state. (You will find licensing information in the "Starting" portal.
Get more information on South Carolina Business Licenses.
South Dakota Business License
You can find many guides and checklists on the Start Your Business page of South Dakota. You will also find a PDF about licensing and registering your South Dakota business, which includes information on common licensing requirements. You should inquire with the relevant agency about whether additional licenses are required for certain departments.
Get more information on South Dakota Business Licenses.
Tennessee Business License
The Tennessee Department of Revenue states that if your business is subject to the Tennessee tax on business, you will need to apply for a business license at the county clerk. If your in-state business generates more that $3,000 in sales, then you will need to obtain either a "minimal activation license" or "standard business license" from the county clerk. You should also be aware of the Tennessee business licensing and registration webpage.
Get more information on Tennessee Business Licenses.
Texas Business License
The Texas secretary of state's website links users to the SBA page for applying for Texas licenses and permits.
Get more information on Texas Business Licenses.
Utah Business License
Visit Utah's OneStop Online Registration System to get your business license. This explains that to apply for a license, you will need to go to your local municipality.
Get more information on Utah Business Licenses.
Vermont Business License
Visit the Vermont professional regulations webpage to view a list Vermont professions that require licenses. You can also access the state's online licensing portal.
Get more information on Vermont Business Licenses.
Virginia Business License
This Virginia.gov page explains how to apply for Virginia's business license.
Get more information on Virginia Business Licenses.
Washington Business License
To find out more about applying for a Washington state license, you can visit the State of Washington online licensing service. The Washington business licensing wizard can provide a tailored licensing solution.
Get more information on Washington Business Licenses.
West Virginia Business License
You can search for a West Virginia business license by category or keyword search if you are a small-business owner. You'll then be directed to the agencies that manage the licenses, permits and registrations your business needs. To access the portal, you will need to create an account.
Get more information on West Virginia Business Licenses.
Wisconsin Business License
To access almost every resource necessary to run or expand your business in Wisconsin, visit the wisconsin.gov portal. For licensing issues, however, scroll down to Licenses and Permits under the Government Resources section. You'll then be taken to the Wisconsin Department of Agriculture, Trade and Consumer Protection License List. This lists all industries alphabetically and gives you the number to contact to renew or apply for your license.
Get more information on Wisconsin Business Licenses.
Wyoming Business License
This Wyoming online guide covers all aspects of permit requirements. If you have any questions, contact the Wyoming Business Outreach Coordinator.
Get more information on Wyoming Business Licenses.
