Federal Business Licenses

You run a small business. You think about many things daily when running your small business—business activities, overhead costs, profits, employee satisfaction. But one of the most important topics to know is whether you’ll need a federal business license to operate your type of business legally.

Follow along as FindLaw takes you through the different types of federal business licenses you should be familiar with. For more information, see FindLaw’s Starting a Business section.

Keep your business compliant. Get a business license report from FindLaw’s trusted partner, LegalZoom.

Why Do I Need a Business License?

Business licenses are legal requirements that give a business owner permission to run a business. Generally, a business needs a business license on a local level to operate in a specific jurisdiction or run a certain type of business. For example, if you run an in-home day care, you may need a local home occupation permit as well as a daycare business license. A few states such as Alaska, Delaware, Nevada, Washington, and West Virginia have state-level business license requirements.

However, your business type determines if you need a federal license as well. For example, if you sold firearms, you would need a federal license for that activity. Failure to secure the specific licenses for your new business can result in fines and penalties.

Other benefits of having the proper business licenses are:

• Can easily apply for and submit sales tax with your Department of Revenue

• Shows investors and financial lenders like the Small Business Administration (SBA) that you’re serious about your business

• Shows you follow the rules and procedures of state agencies and federal agencies

• Shows your consumers or clients that you’re a credible business or DBA (doing business as)

There are state agencies and federal agencies that issue licenses.

Types of Federal Business Licenses

No matter what type of business license you need, you must have a few pieces of information before applying:

• Legal business name you registered with your secretary of state, even if it’s a DBA

• Type of business structure, or whether it’s a sole proprietor, partnership, limited liability company (LLC), or corporation

• Employer Identification Number (EIN) or, if a sole proprietorship with no employees, the sole member’s Social Security number

• Business location address

• Business entity mailing address

Business license costs vary based on the license type and the issuing state government or federal agency.

Employer Identification Number (EIN)

Except for sole proprietors, most business types must submit an application with the federal government (Internal Revenue Service) for an Employer Identification Number (EIN). This number allows the IRS and other agencies to track industry data and statistics. You also use this number for filing federal taxes.

It’s free to get an EIN on the IRS site.

Types of Businesses That Need Federal Business Licenses

You usually won’t need a federal business license. But you will if you run any business that involves the following:

• Investment advising – Securities and Exchange Commission (SEC)

• Drug manufacturing – Food and Drug Administration (FDA)

• Meat products – United States Department of Agriculture (USDA)

• Broadcasting – Federal Communications Commission (FCC)

• Ground transportation – Department of Transportation (DOT)

• Selling alcohol, tobacco, or firearms – Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF)

These U.S. government agencies also issue regulatory requirements and guidelines for these industries. Failure to follow these requirements could result in fines, penalties, and potentially shutting down your business.

Registering Trademarks, Patents, and Copyrights

Federal intellectual property registration is not required, but it helps add value to a business. Federal registration also protects creative and innovative work. Intellectual property includes:

• Trademarks and service marks (United States Patent and Trademark Office)

• Patents (United States Patent and Trademark Office)

• Copyrights (United States Copyright Office)

Federally registering these works provides business owners with exclusive use of the intellectual property in the United States. Entrepreneurs could stop others from using their work, license their work for royalties and fees, and collect attorney’s fees in court.

Receiving an Alcohol Permit

If you’re in the business of manufacturing, wholesaling, importing, or selling alcoholic beverages, you need a federal permit. This includes distilleries, breweries, or wineries.

Types of regulated alcohol:

• Beer

• Wine

• Hard liquor

The Alcohol and Tobacco Tax and Trade Bureau (TTB) has strict rules regarding when, where, and how alcohol is handled. Be sure to know the laws and get the correct permits. If not, you could face hefty fines or have your business shut down.

You may also need a local licensing permit from your municipality (city or town) and state agency. Before picking a location for your business, check local zoning restrictions.

Broadcasting Licenses for Radio and Television

These days, it’s easy to broadcast or film a television series on your phone or at home. You can reach audience members quickly. If you engage in these activities, you must follow The Communications Act and get a license from the Federal Communications Commission.

If you create a new station, broadcast on the radio (AM, FM, satellite radio), or air a TV show, you need a permit from the FCC. Before building a radio station or broadcast station, you need an FCC construction permit. You must also follow certain regulatory procedures, like making your work available to people with disabilities. Podcasts streamed online don’t need an FCC license.

Specific Licensing for Firearms, Ammunition, and Explosives

Any business involved in manufacturing, dealing, or importing firearms, ammunition, or explosives must meet strict legal requirements. The Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) regulates these activities. Their goal is to ensure the general public’s welfare.

Be sure that your business follows all the licensing requirements and submit your license application before opening your doors. Here are the initial license application fees based on the business services you wish to offer:

• Ammunition manufacturer – $30

• Collectors – $30

• Dealer of firearms – $200

• Dealing destructive devices – $3,000

• Firearm manufacturer – $150

• Destructive device manufacturer – $3,000

• Pawnbroker of firearms – $200

No federal license is needed if your business only deals in ammunition, but there may be state and local requirements. The current response time for your license is 60 days.

State Licenses and Permits

In addition to federal licenses, don’t forget to get your local licenses and permits from your local government and state licensing agencies.

Standard state startup licenses and permits include:

• Occupational license

• General business license

• Health department permit

• Property use permit

• State professional licensing for certain professions like contractors, attorneys, and doctors

• State sales tax license if you sell products

• Local sales tax license

More information for business owners can be found using the FindLaw business startup checklist.

Get Help From a Small Business Lawyer

You’ve identified that you may need a federal business license. Now what? Working with a reputable DIY business formation service or consulting a qualified business law attorney can make your startup process go smoothly.