Depending on the type of business you’re running, you’ll probably need to apply for licenses and permits to operate legally. Certain businesses–especially restaurants and alcohol vendors—need to get them at both the federal and state levels, and sometimes even at the county or city level depending on the laws in your area.
Check out our guide below to learn more about what licenses your business may need and how to get them.
Although it may not be the most exciting part of starting a business, one can’t-miss step in getting set up is securing the licenses and permits you need to legally operate your new business. No matter how small your business operations are, understanding licensing requirements and permits is essential. Don’t skip this part and risk getting your business in trouble right out of the gate!
Although business licenses and permits can be cumbersome to apply for, they benefit you and your clients. Getting a license for your specific business should be one of the first steps in your business plan because it protects your clients and establishes your trustworthiness.
What is a Business License?
A business license is a certificate that conveys certain rights to a business. Some business licenses give your company the right to engage in business in a specific area. For example, all businesses operating in Atlanta, Georgia are required to get a local business license in order to conduct business in the city.
Other business licenses give your business the right to offer a specific product or service. Certain products (like alcohol and tobacco) and professions (like doctors and lawyers) are highly regulated and naturally require licenses. However, many businesses are surprised to find that they may need special licenses even for everyday businesses. For instance, running a bowling alley in Hartford, Connecticut requires a specific business license. So does operating a bicycle tour business in Maui County, Hawaii.
Is a Business Registration the Same As a Business License?
No. This confusion occurs because many people casually refer to registering a business as “getting a business license.” However, business registration is different. Business registration involves filing formation documents (commonly called “Articles of Incorporation” or Articles of Organization)” with the state to legally incorporate your business.
What is a Professional License?
A professional license is documentation that shows you are qualified to perform a highly-skilled service. Some common jobs that require professional licenses include accountants, architects, dentists, doctors, electricians, engineers, lawyers, pharmacists, plumbers, real estate appraisers and veterinarians.
Professional licenses are usually issued by the state board for that profession, such as a state bar association or state medical board.
Where do I Get a Business License?
Unfortunately, there’s no “one stop shop” where you can get all your business licenses. There are several federal agencies that issue business licenses, along with numerous state and local agencies that oversee a variety of other business licenses. Because all of these agencies function separately, you have to get each license from each specific agency. Below, we’ve listed information on federal agencies, state agencies and local business licenses.
What Federal Agencies Issue Business Licenses?
The federal government has roughly a dozen agencies that issue business licenses, such as the Alcohol and Tobacco Tax and Trade Bureau (TBB) and the National Oceanic and Atmospheric Administration Fisheries Service (NOAA).
The major issuing agencies are listed below, along with the products or services that require federal licenses or permits:
- TBB: alcohol or tobacco (retail sale, wholesale, import or manufacturing)
- Bureau of Alcohol Tobacco, Firearms and Explosives: firearms, explosives, or ammunition
- NOAA: commercial fishery
- US Fish and Wildlife Service: wildlife products or activities
- Dept of Agriculture: plants, animals, biotechnology and other biological material
- Federal Aviation Administration: aircraft operation, transport or maintenance
- Bureau of Safety and Environmental Enforcement: drilling or mining
- Dept of Transportation: large-vehicle transportation
- Federal Maritime Commission: sea transport
- FCC: broadcasting
- Nuclear Regulatory Commission: nuclear energy
What States Require a Business License?
All states have some form of state-level licensing (mostly professional licensing). However, only a few states (and DC) require mandatory, state-issued business licenses for all businesses:
- Alaska: Division of Corporations, Business and Professional Licensing
- Delaware: Delaware Department of Revenue (for businesses operating in the state)
- DC: Department of Consumer and Regulatory Affairs
- Hawaii: Hawaii Department of Taxation
- Nevada: Nevada Secretary of State
- Washington: State of Washington Business Licensing Service
- West Virginia: West Virginia State Tax Department
Professional licenses are also issued at the state level, usually by the state board for your particular profession. For instance, if you’re a CPA in Minnesota, your license would be issued by the Minnesota State Board of Accountancy.
States agencies can license other products and activities as well. Common state-level licenses include state liquor licenses and film production permits. The state’s Department of Licensing usually maintains a list of required state-level licenses.
Do I Need a City or County Business License?
Many, many businesses will need a local business license. However, every city and county does things their own way, making navigating local licenses somewhat tedious and difficult. Below are a few tips to get started:
- Visit your city and county’s websites: Look for a section on licenses, permits, or business in general. Be sure to check both your city AND county—while it’s not common, businesses are occasionally required to have both city and county licenses.
- Call or visit the city or county clerk’s office: If your area doesn’t have a comprehensive website, the next step is to talk someone who can point you in the right direction.
- Check in with the local tax office: In many areas, business licenses are closely tied together with local taxes (some areas even refer to the license as a “business license tax”).
Get Help With More of Your Business Filing Needs
Whether you’re a freelance chef, plumber, marketing consultant wanting to start a side hustle, or a full-time independent contractor, you’ll need to apply for a business license or two. The application process may need you to do quite a bit of research, but hopefully, this article provided you with information that points you in the right direction and makes the process feel less intimidating.
Do your due diligence and get the licenses and permits you need to start your business in compliance with the law, and you’ll be avoiding a common, costly mistake too many first-time business owners make when starting out.