Business Licenses and Permits: What Every Startup Needs to Know

When you launch a new business, there are a lot of items that you need to attend to before you can begin conducting business. One of the most overlooked, but critical steps is obtaining business licenses and permits. Depending on your business industry, your next steps might include obtaining local, state, or federally required licenses or permits.

In this article, we’ll briefly cover what licenses and permits are, discuss the most common federal and state permit and licensing requirements, and answer some business license FAQs. We also show you how to find the exact licenses and permits you need.

What is a Business License?

A business license is any license or permit required by a local, state, or federal agency to do business. These agencies issue licenses and/or permits for a variety of business activities. Common examples include a seller's permit, zoning permits, liquor license, and many more.

Failure to comply with license and permit requirements could cost your business additional fees, penalty payments, or operational restrictions. Be sure to research and understand the particular requirements germane to your state, region, and industry.

What are the Different Types of Business Licenses and Permits?

You will need to apply for a business license and/or permit in order to conduct business. This is largely based on what you do and where you're located. Here are the three main levels of business licensing.

Federal

If your business activities are regulated by the U.S. Government, you’ll need to obtain the necessary permits from the federal agency governing that activity. Here are a few common industries that require a federal license or permit:

• Agriculture. If you import or transport animals or animal products (except butter, cheese, or prepared foods), biologics or biotechnology, RNA/DNA extracts, microorganism, or plants across state lines, you’ll need to obtain a permit from the U.S. Department of Agriculture (USDA).
  
  Additionally, if your business imports live dogs for resale or research, you’ll also need to obtain an Animal and Plant Health Inspection (APHIS) permit from the USDA.
• Alcoholic Beverages. If you import, manufacture, wholesale, or sell alcoholic beverages at a retail location — like a liquor store, restaurant, or bar — you’ll need to obtain a permit from the Alcohol and Tobacco and Trade Bureau (TTB).
• Firearms. If your business manufactures, deals, or imports ammunition, explosives, or firearms, you need to be licensed and permitted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
• Transportation and Logistics. Trucking and transport businesses using oversized or overweight trucks, e.g., semis and tractor-trailers, are required to obtain permits for each state they plan to operate or travel through. You’ll find licensing contacts for all 50 states and the Canadian provinces on the DOT’s website.

Find the full list of federal licenses on the SBA's website.

State

Outside of these federal agencies, you may need additional licenses or permits at the state or local level, as determined by your business activity. You may need to obtain a license or permit if you operate any of the following businesses:

• Auctioneering
• Construction or Plumbing
• Dry Cleaning
• Farming Activities
• Restaurants and Bars
• Retail Shops
• Vending Machines
• Many others

Local

Depending on your industry, you may not need a license or permit from a federal or state agency, but you will likely need a local license or permit. Even home-based businesses often need a general business permit to operate. Some cities even offer home-based business permits.

Check with your city or county business office to ensure you have the right licenses and permits to operate.

How Do I Find the Business Licenses and Permits that I Need?

You’ll need to do some research to determine which licenses or permits your business needs — we recommend starting at the federal level and narrowing down from there. Once you receive your licenses and permits, be sure to keep them up to date. It's easier to renew than to start all over again. Here’s how to get the licenses and permits you need.

Step 1. Check the SBA’s website to determine if you need a federal license. If your business falls into one of the categories listed, click on the federal agency to learn more and apply.

Step 2. Check your state’s official .gov website for state-required licenses and permits. For example, if you live in California, go to the CalGold website and type in your city and business industry. The search query will then display all the licenses and permits that your business may need.

To find your state's requirements, check out our ultimate guide for obtaining business permits or licenses in all 50 states.

Step 3. Inquire with your city or county business office. Even if you do not need a state or federal license or permit, you may need some kind of general business license issued through your city or county. Inquire with your city’s business office and go from there.

Business License Frequently Asked Questions

How much does a business license cost? Depending on your location and type of business, your license or permits could cost anywhere from $25 to several hundred dollars. Some states have general statewide business license fees, while others may also have local or county-based business license requirements too.

How long does it take to get a business license? In general, you can expect to receive a business license within a of couple weeks. However, this is wholly dependent upon your industry and your location. ​

Do I need a business license for my home-based business? For the most part, yes. Any type of business — including home-based businesses — will normally need a local city or county business license to engage in any business activities within a local jurisdiction.

Do I need a business license if I have an LLC? Yes. You don’t need a license to form your LLC, but you'll need to follow your state's procedures to obtain one once it's formed. Licenses and permits allow you to operate the LLC as a business in your location.

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