How to get a business license: Federal, state and local

Walk the line

There are a number of hurdles that could stand in your way as you venture into the exciting and sometimes scary world of starting your own business. But knowing what they are is half the battle, right? So let’s tackle one right away: how to get a business license.

Rather than spend hours scouring the web for information on which licenses you need and where to get them from, keep reading for more information on how to get a business license (and be sure to check out this checklist for starting a business.) The information in this article will help you determine which licenses you’ll need at the federal, state and local levels, as well as if you run a home-based business.

How to get a business license from your federal, state and local government

There are different reasons you might need different business licenses, but one thing is certain: If you are running a business, you’ll need at least one.

Whether you’re running a brick-and-mortar store or an online business — the government needs to be able to keep track of your business for revenue and tax collection purposes.

Specifically, you’ll need to get every business license that your local, state and federal government requires of you. For some small business owners and entrepreneurs, it’ll be as simple as acquiring a state-sanctioned small business license. For others, there’s more to it than that. It all depends on what you do and where you live.

Federal business licenses

Some small business owners won’t need to get one of these because federal business licenses only apply to certain industries, typically ones that require close oversight and regulation from the government.

Federal business license: According to the U.S. Small Business Association (SBA), the following industries are required to obtain a federal business license:

  • Agriculture
  • Alcohol
  • Aviation
  • Firearms
  • Mining and drilling
  • Radio or television media
  • Transportation (including maritime)
  • Wildlife

If your small business falls into one of these categories, the SBA website will direct you to the licensing portal for your specific industry.

State business licenses

Every small business owner will need at least a general business license. All other licenses included here depend on what you sell, as well as whether you employ anyone other than yourself.

  • State business license: This is required for every business.
  • Seller business license (aka seller’s permit): This license goes by various names in various states, but if you sell anything, you need it. If you make sales in more than one location, you might need a sales permit for each location.
  • Professional/occupational licenses. Depending on the state in which business will be conducted, businesses in particular industries (like lawyers, accountants and child care providers) might require special professional or occupational licenses.
  • Tax permit: While this isn’t a license, per se, it’s something the IRS requires of you if you intend to conduct business as a business entity (instead of as an individual) and if you plan to hire anyone. In order to secure this permit, you’ll need to apply for an Employer Identification Number (EIN) with the IRS.

Every state has its own set of licensing stipulations and points of contact. Consult first with the SBA website, which will direct you to the licensing portal for your state. BizFilings is another great resource for information about the various licenses and permits needed to do business.

Local business licenses

Drilling down even further, there is the potential that your city, town or county will require you to procure licensing in order to conduct business. These licenses are typically in place to ensure that your business doesn’t intend to disrupt local citizens and will act in a way that will benefit the community at large.

  • Zoning and land use permit: If your business will be the first of its kind in your area, you’ll need to see if your local area has been zoned for your business type. If not, you’ll need a land use permit.
  • Property use and zoning permit: This is similar to the zoning and land use permit; however, this is for home-based business owners. For this permit, you’ll have to check with your property management company or homeowner’s association to see if they allow business to be conducted on the premises.
  • Building permit: If you’re planning to change a current structure or build a new one, you’ll need a building permit.
  • Fire department permit: Another safety-related permit, the fire department permit is for businesses with heavy foot traffic, like restaurants, hotels and gyms.
  • Health license and permit: This is for businesses like health spas and restaurants that have direct contact with the public. It ensures that they can provide an environment free from health hazards.
  • Signage license and permit: Local governments can dictate everything from the size of your sign to how it’s lit, so be sure to check existing guidelines before investing in any new signage for your business.

Not every town, city or county will have special licensing requirements for small businesses, but it’s best to check with your local town hall or city government to be on the safe side.

For small business owners, licenses ensure that you’re committed to paying taxes, maintaining a safe work environment and that you intend to act in accordance with local guidelines. Once you understand the process of how to get a business license and you have the correct ones in place, make sure they’re properly displayed, keep them renewed, and continue to follow the original guidelines. Best of luck!

The above content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.