Starting a Business: License and Permit Checklist

If you're starting a business, you may need several licenses and permits from federal, state, and local government agencies. Licensing and permit requirements can vary among jurisdictions. Contact your state and local government to determine the specific obligations of your new business.

Below is a checklist covering the different federal, state, and local licenses and permits you may need before opening for business.

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Basic business operation license: This general business license is from the city where your business will operate. It can also be from the local county or parish if your business will operate outside of any city's limits.

Federal Employer Identification Number (EIN): This is also called a tax ID number. The Internal Revenue Service (IRS) issues it. Almost all types of business require one. Your business may also need a similar tax identification number from your state's department of revenue or equivalent agency.

Fictitious business name permit: You may know this as a "DBA" or "doing business as" permit. Any business that uses a business name different from the owner's legal name may need this. Sole proprietorships often require a fictitious business name permit.

Zoning permits and land use permits: These are necessary for some business types, especially manufacturing and certain home-based business operations.

Health department permits: These permits are necessary if your business prepares or sells food products.

Sales tax license: This state license is needed to sell almost all products and services. Check with your state's department of revenue for additional information and registration.

Fire department permits: Businesses that attract large numbers of customers (like restaurants, nightclubs, and bars) will need this.

Special state-issued business licenses or permits: Some states require specific licenses and permits if your business sells any of the following types of goods:

• Liquor and alcoholic beverages
• Lottery tickets
• Gasoline
• Firearms
• Recreational use marijuana
• Medical marijuana

Asking a local business lawyer in your state to help guide you through the special state-issued permits would be helpful.

Special state-issued occupational or professional licenses: Professional licenses may be necessary if you or your employees offer any state-regulated services, including:

• Medical care
• Auto repair
• Real estate sales
• Tax services
• Insurance sales
• Cosmetology (hair stylists, estheticians, and nail technicians)
• Legal representation (attorneys and lawyers)
• Daycare and childcare centers

Occupational or professional licenses are necessary for you to operate legally.

Special federal business licenses or permits: Some federal government agencies require special licenses or permits for businesses involved with:

• Investment advising (U.S. Securities & Exchange Commission)
• Drug manufacturing (U.S. Food and Drug Administration)
• Preparation of meat products (U.S. Food and Drug Administration)
• Broadcasting (Federal Communications Commission)
• Ground transportation, like trucking (U.S. Department of Transportation)
• Manufacturing tobacco, alcohol, or firearms, or selling firearms (U.S. Bureau of Alcohol, Tobacco, and Firearms)
• Commercial fishing (National Oceanic and Atmospheric Administration)
• Agriculture, if you transport animals, animal products, biotechnology products, or plants across state lines (U.S. Department of Agriculture)

Contact the regulatory agencies for your service or product above for more information.

Environmental permits: Some states require this additional permit if your business engages in any of the following activities that impact the environment:

• Generates hazardous waste
• Releases wastewater or stormwater
• Produces certain types of air pollutants

Not having the proper environmental permits can set your business up for hefty fines. Contact a business lawyer or environmental lawyer to help you understand this process.

Do Online Businesses Need a Permit or License?

If you run an online business, treat it like a brick-and-mortar. It's likely you'll need to comply with the same licensing and permitting requirements as a storefront business.

But the only state licensing requirements you must abide by are those in the state where your web-based business operates. Suppose your online business location is in Nevada, but you sell to customers in Indiana, California, and Utah. In this example, you only have to follow Nevada's rules, not those of every state where you sell or ship. But you may need to collect sales tax in those states requiring a seller's permit.

Do Home-Based Businesses Need a Permit or License?

Like stores with a physical location and online businesses, you must also comply with licensing and permit requirements for your home-based business. This is especially true if customers frequently come into your home.

Check local zoning regulations to ensure your residential area allows home-based businesses. Further, if you live in a community with a homeowners association (HOA), check their rules for home-based businesses.

If you rent your home, review your lease to see if you're even allowed to operate a home-based business. Many residential leases forbid commercial use. It could give your landlord a reason to end your lease if they found out.

How Much Should I Expect for Business License Costs?

The cost to obtain the necessary licenses and permits for your business depends on your location and business activities. Most states' small business development center websites can direct small business owners to the appropriate agencies for cost information for different licenses and permits.

Some states don't charge for a sales tax permit or a general business license. But you can estimate to pay the following for other types of licenses and permits:

• Professional licenses can range from about $180 to $425.
• Special licenses to sell certain types of products (like a liquor license) can hover close to $3,000.
• City, county or parish, or other municipal general business licenses cost around $180, with an extra fee if your business requires fingerprinting.

There are also associated costs for establishing your business structure. For example, filing your business entity as a limited liability company (LLC) costs around $150 in most states.

Most municipalities also require periodic renewals, which can include a renewal fee.

Remember to factor your licensing and permit costs into your business budget—they can add up.

Starting the Application Process

Just like costs, the application process for obtaining different business licenses and permits varies. Most cities' official .gov websites have a “professional licensing agency" section. This is where business owners can find links to the appropriate entities for each type of license or permit.

You can complete most local-level business permit and license applications online:

• For tax permits, visit your state's department of revenue.
• For city and county general business licenses and zoning permits, visit the municipality's official website or the department of commerce.
• For zoning permit applications, use your city's official website to find them.
• For fictitious business name (DBA) permits, local county clerk offices often process them.

The U.S. Small Business Administration (SBA) has district offices in all states and some U.S. territories. If you're unsure of where to start with your application process, these local offices can be a great resource.

Get Legal Help With Your Business Licenses and Permits

Understanding different types of business licenses and permits can be overwhelming. Consider talking to a small business attorney in your area. They will know the various licenses and permits your business needs to operate legally. They can also keep you in good standing. Your attorney can also help you fill out any applications and forms.