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Do you need a business license? How to find the licenses and permits you need

Last reviewed . General information, not legal or tax advice.

Most businesses need at least one license or permit, but there is no single national business license. What you need depends on your activity and location: federal licenses for a few regulated activities, state licenses and tax registrations, and county or city licenses, zoning approval and health permits. Check each level for your exact address and activity.

Who issues business licenses and permits?

Licensing happens at several levels at once, and the SBA notes most small businesses need a combination of them:

  • Federal, only for activities a federal agency regulates. Examples from the SBA's list: alcohol (Alcohol and Tobacco Tax and Trade Bureau), firearms (ATF), importing or moving animals and plants across state lines (USDA), commercial fishing (NOAA Fisheries), and broadcasting (FCC).
  • State, for regulated trades and professions and for tax registrations such as a sales tax or seller's permit. States regulate a broader range of activities than the federal government.
  • County and city, for general business licenses, zoning and occupancy approval, health permits and signs. Rules and fees vary widely between neighboring towns.

Which activities usually need a license?

The SBA names activities commonly regulated at the state and local level: auctions, construction, dry cleaning, farming, plumbing, restaurants, retail and vending machines. Others that often require a license or permit include:

  • Selling taxable goods, which usually requires a state sales tax or seller's permit before your first sale
  • Making or serving food, through state or local health rules, or a state cottage food law for some home kitchens
  • Licensed trades such as plumbing and construction, both on the SBA's list, and other occupations your state licenses
  • Running a business from home, which can still be subject to local zoning rules

If your business fits one of these, contact the state board or agency for that trade before you take customers. For food made at home, see starting a cottage food business; for sales tax, see seller's permits and sales tax.

How do I find out which licenses I need?

  1. Describe your activity precisely. "Selling homemade candles online and at weekend markets" leads to different rules than "candles".
  2. Check the federal list. If your activity is not on the SBA's list of federally regulated activities, you probably need no federal license.
  3. Check your state. The SBA suggests starting at your Secretary of State's website. Some states also run a permit portal; California's tax agency, for example, points sellers to CalGold for permit information.
  4. Call your city or county. Ask the business license office and the planning or zoning office what applies at your exact address, including for a home business.
  5. Ask an advisor. A Small Business Development Center or SCORE mentor knows local requirements and can check your list for free or at low cost.

Write down each license, the agency, the fee and the renewal date. The SBA warns that some licenses expire, and that renewing on time is often easier than applying again.

Do I need a license for a home-based or online business?

Often, yes. Working from home does not exempt you from local rules. The SBA notes that zoning ordinances can still apply to home-based businesses, and that zoning is usually controlled locally, so check with your city planning department before you start, especially if customers will visit or you will store inventory.

Selling online does not exempt you either. You may still need your city or county's general business license, and selling taxable goods usually means registering for sales tax in your state. Texas, for example, requires a sales tax permit from anyone engaged in business in Texas who sells or leases taxable goods, whether the sales happen in a store or online.

What happens if I operate without a license?

Consequences depend on the agency and the rule. California's tax agency, for example, says making sales without first getting a seller's permit violates the law and subjects you to fines and penalties.

It can also slow you down elsewhere: the SBA lists a business license among the documents banks commonly ask for when you open a business account. Getting licensed before your first sale is usually cheaper and simpler than fixing it later.

Frequently asked questions

Is there a general business license for the whole country?

No. There is no single national business license. Federal licenses exist only for specific regulated activities such as alcohol, firearms or broadcasting. Most businesses deal with state registrations and their county or city's general business license, which is why the requirements, forms and fees change depending on exactly where you operate.

Do I need a business license if I have an LLC?

Usually yes. Forming an LLC registers the entity with your state, but it is not a license to operate. You still need the city or county business license, the state tax registrations and any trade or health permits your activity requires. The SBA notes LLCs may need licenses and permits from the county or city.

How much does a business license cost?

It varies by city, county, state and activity, from no charge for some registrations to larger fees for regulated trades. Some are free: California's tax agency says there is no charge for a seller's permit, though it may ask for a security deposit. Check each agency's published fee before you budget.

Do I need a license to sell at a farmers market or craft fair?

Often. Selling taxable goods usually requires a state seller's or sales tax permit, even at temporary events, and California offers temporary permits valid for up to 90 days. Food sellers also need to follow state or local health rules. Ask the event organizer which permits vendors must show.

Sources

  1. Apply for licenses and permits, U.S. Small Business Administration. https://www.sba.gov/business-guide/launch-your-business/apply-licenses-permits
  2. Pick your business location (zoning), U.S. Small Business Administration. https://www.sba.gov/business-guide/launch-your-business/pick-your-business-location
  3. Register your business, U.S. Small Business Administration. https://www.sba.gov/business-guide/launch-your-business/register-your-business
  4. Open a business bank account, U.S. Small Business Administration. https://www.sba.gov/business-guide/launch-your-business/open-business-bank-account
  5. Texas Online Tax Registration Application, Texas Comptroller of Public Accounts. https://comptroller.texas.gov/taxes/permit/
  6. Publication 107, Do You Need a California Seller's Permit?, California Department of Tax and Fee Administration. https://cdtfa.ca.gov/formspubs/pub107/
  7. Publication 107: Applying for a Seller's Permit, California Department of Tax and Fee Administration. https://cdtfa.ca.gov/formspubs/pub107/applying-for-a-sellers-permit.htm
  8. Local assistance, U.S. Small Business Administration. https://www.sba.gov/local-assistance

This guide is general information, not legal or tax advice. Rules differ by state and city and change over time, so confirm the details with the official sources above or a licensed professional.