Do I Need a Business License? Business License FAQs

A business license is the permission to operate your business in a state, federal, or local government. Some states grant authority to conduct business when you register a business in the state such as a corporation or limited liability company (LLC). These types of business entities shield the business owner‘s personal assets from any business claims or lawsuits.

However, you may need to apply for a general business license, a state license, or local business license, depending on your business. Contact your state, county, and city to determine if you need to register your business for a business license number. Additionally, if you are a sole proprietor you must apply for a business license.

The process for obtaining a business license for an online business is the same as for any other business. File an application for a business license with the state, county, or local government and pay the license fees.

Check with your local county and city to see if they require additional permits. For example, if you sell goods online in your state, you may need to apply for a seller’s permit or a sales and use license. And if you sell to people in other states that charge sales tax, you may need a seller’s permit from those states.

A home-based business is similar to any other business in terms of a business license. You can apply for a corporation, LLC, or other business entity with the Secretary of State’s office. Depending on your business, you may need additional licenses or permits from your local city or county. And as a home-based business, you may need approval from your homeowner’s association (HOA).

A business license is government authorization for conducting business in a specific jurisdiction. A permit, on the other hand, is a more specific granting of permission to operate a particular type of activity within your business. For example, ABC Enterprises, LLC could conduct business activities in the state. If ABC Enterprises were to operate a restaurant, they would have to get permits to handle food, zoning permits, and occupancy permits.

A business license application typically asks for information about your business operations and how to contact the business owner. For an application, you may need the following:

• The business name and DBA (if applicable)
• The name and contact information of the business owner
• A tax ID number, which could be an Employer Identification Number (EIN) if a corporation or LLC or a social security number if a sole proprietor
• A business address and contact phone number
• The type of activity the business will perform

There will also typically be a license or application fee that goes along with your business registration.

Generally, business licenses are renewed annually or every two years. Check with your state and local city and county regulatory agencies to determine the filing requirements and any business license tax, state tax, or renewal fees due. Many governments have online business license renewal portals to accept renewal applications and payments.

Depending on your business location and type of business, you may need to apply for other licenses and permits. Some examples include:

• Seller’s Permit: If you sell goods to the public, either from a store or online, you must collect sales taxes and remit them to the taxing authorities. A sales permit is also known as a Sales and Use License. If you have a seller’s permit, you may also need to file a gross receipts tax on sales proceeds. However, if your sales are under a specific threshold, your business may have an exemption from the tax.
• Specific Industry License: If you sell food in a restaurant or from a food truck, there are additional permits, inspections, and requirements. Contact your local health department for the rules that may affect your business.
• Professional License or Occupational License: If you are a doctor, lawyer, electrician, or hairstylist, you may need a professional license to work in that state. More and more industries are regulated, so check to see if you need an additional certification or license.
• Federal License: You may need a license for certain business activities regulated by the federal government, such as selling alcohol or firearms. Check with the SBA’s list of federal agencies for license requirements.
• Certificate of Occupancy: If you have a business open to the public, such as a restaurant or hotel, you need a certificate of occupancy showing your building is up to code. This is a local license.
• Zoning/Home Occupancy: There may be local zoning rules and ordinances for home-based businesses. Contact your local city and county business license agencies for requirements and applications for your home-based business.
• HOA Approval: If you operate from home, you might need permission from your homeowner’s association (HOA).

Operating a business without a license can have significant consequences, including fines, lawsuits, and business closures. These consequences could damage your personal and professional reputation. You may also be unable to obtain business insurance, putting your operation at risk.