Do I Need a Business License?

There is no single "US business license." Instead, businesses need the specific licenses and permits that apply where they operate and to what they do (SBA).

Local licenses

Many cities and counties require a general business license or business tax registration, even for home-based businesses. Local governments may also require:

• Zoning approval or a certificate of occupancy
• Home occupation permits
• Signage permits
• Health permits for food businesses
• Fire department permits

State licenses and registrations

• Professional and occupational licenses: contractors, cosmetologists, real estate agents, health professionals, lawyers and many others
• Sales tax permit (seller's permit) if you sell taxable goods or services
• Employer registrations for unemployment insurance and withholding if you hire
• Entity registration for LLCs and corporations, and registration to do business in other states where you operate
• Assumed name (DBA) registration if you use a name other than your legal name

Federal licenses

Only certain activities need federal licenses, such as alcohol production and importing, firearms, aviation, commercial fishing, interstate trucking and broadcasting (SBA).

Online businesses

Selling online does not avoid licensing or sales tax rules. You may need to collect sales tax in states where you have economic nexus.

What if you operate without one?

Penalties can include fines, back fees, orders to stop operating, difficulty enforcing contracts in some states, and problems with insurance or financing.

How to find what you need

1. Check your city and county websites.
2. Check your state's business portal or secretary of state.
3. Review your industry's licensing board.
4. Use the SBA's guidance on licenses and permits.

Renewals

Many licenses must be renewed yearly. When a license expires, you may need to stop the licensed activity until it is renewed, and late fees often apply.

After licensing

See what to do after forming an LLC. A business lawyer can help with regulated industries and multi-state operations.

Sources

1. U.S. Small Business Administration: Apply for licenses and permits
2. U.S. Small Business Administration: Register your business
3. IRS: Get an employer identification number