Starting a business: A license and permit checklist

Once your business gets started, it's tempting to jump at the chance to sell goods or provide services. But forming a company is just the first step. You likely may need business licenses to operate depending on your location and field. Business permits give owners the right to work legally in their city, county, or state.

The licenses you'll need vary wildly from place to place and between industries. While applying for permits may sound daunting, you stand to gain from the legal and financial benefits they afford. To help get your business started, we'll explain how to get a business license and provide a checklist of standard permits.

What is a business license?

Business licenses secure the right of a business entity to operate. Permits come from local, state, or federal agencies. 

To break it down further, going through a business license application typically means:

• You can legally run your business.
• You're up to date on health and safety guidelines.
• You meet the legal and educational standards in your area.

How do you get a business license?

No two businesses share the same legal requirements. Even the same licenses come with different criteria across state or county lines. But by following these five steps, you can set yourself up to succeed. To start a business, you’ll need to:

1. Register your business

If you haven't already done so, you need to choose a business structure. To get a company off the ground, you should choose its structure and a business name, then register with government agencies.

Common business structures include:

• Sole proprietorships
• General partnerships
• Limited liability companies (LLCs)
• Corporations
• Nonprofit corporations

LLCs, corporations, and nonprofits have to file with their state governments. Your city and county may request separate registration as well. Check in with your Secretary of State's office to learn your requirements.

2. Apply for a tax ID

Corporations require a tax ID. The federal government requires any business with more than one owner or employee to file with a federal employer identification number, or EIN. You can apply via mail or the IRS website.

3. Research the permits you need

More often than not, a business requires at least one type of business license. Contact your Secretary of State or local Small Business Administration office for more details.

You typically also need certification to practice in these fields, among others:

• Medical care
• Auto repair
• Real estate sales
• Tax services
• Insurance sales
• Cosmetology
• Law

4. Prepare your business documents

There's no tried and true list of materials for every permit application. So, before you apply for a new business license, gather your firm's documents. Many applications request these forms and items:

• The filing fee
• Your business tax ID
• A description of the company, its location, and its activities
• Founding documents
• Copies of corporate records, including bylaws and articles of incorporation
• A list of owners, investors, or managers allowed to sign agreements on the business's behalf
• Audited financial statements
• Relevant insurance information
• The educational or professional certifications needed to perform your service

5. Apply for your license

You may have to apply for multiple licenses with different local, state, and federal agencies. Your Secretary of State's office and local SBA office may be able to direct you to mailing addresses and online portals for filing.

At this stage, you may wonder:

• How much is a business license?
• How long does it take to get a business license?
• Do I need a business license?

Across license types (such as a state license or federal license), you'll get different answers. Application response times range from days to months. And while some licenses come at no cost, others go for thousands of dollars.

Common types of business licenses

While no business license is universally needed, these permits are some of the most common. Most businesses treat these business license types as a baseline necessary to conduct business. By getting these certifications, entrepreneurs have room to grow while following legal guidelines.

General business license

Needed for: Legally operating a business in your city, county, or state. 

Where to apply: Your Secretary of State's office, your state's department of revenue, or a local agency that regulates business in your city or county.

Sales tax permit

Needed for: Selling goods and collecting sales tax. In states that do not collect sales tax, you can sell goods and services without this permit. It is also known as a seller's permit or sales tax license.
 

Where to apply: Your state's Department of Revenue

Location and land use permits

Some local municipalities require permits to operate out of a specific area. By applying for these permits, you reserve the right to work from your location of choice. Most of these permits come from city or county officials. You can request more specific information from your local city hall.

Zoning permit

Needed for: Zoning permits are required for operating your business in a designated area. Some owners apply to run out of an area zoned for different types of business. In these cases, you may have to apply for a variance or a conditional-use permit.

Where to apply: Your local building department, zoning authority, land-use agency, city council, or municipal building office

Home occupation license

Needed for: Running a home-based business or any business in a residential area. Depending on their local and state laws, home-based businesses may need a home occupation permit to list a home as their primary business location. In other cases, you may need one just to work from home.

Where to apply: Your local building department, zoning authority, land-use agency, city council, or municipal building office

Building or construction permit

Needed for: Making any changes to the place where you'll run your business. Local entities tend to issue these permits more than states. Additionally, each jurisdiction sets unique criteria for what changes call for a license.

Where to apply: Your local building department, zoning authority, land-use agency, city council, or municipal building office

Sign permit

Needed for: Setting up a sign for your business. Local authorities may also stipulate specific requirements, such as the size of your sign and where you can place it.

Where to apply: Your local building department, zoning authority, land-use agency, city council, or municipal building office

Health and safety licenses

You may need additional licenses if your business deals with safety or environmental hazards. Read over these entries to ensure you're following safety compliance standards. Bear in mind that states tend to offer these permits more than cities or counties.

Health permits

Needed for: Operating a business that involves preparing and handling food products. Restaurants, hotels, and hospitals need certification showing they exceed basic health and safety standards. Businesses that attract large numbers of people may require extra permits.

Where to apply: Your city, county, or state's local health authority

Fire department permits

Needed for: Using flammable materials or assembling customers in one enclosed location. Even if your business doesn't need a license, it should still pass inspections by your local fire department.

Where to apply: Your local fire department

Environmental licenses

Needed for: Any activities that discharge an environmental contaminant into the air or water. In addition to permit fees, many states impose extra fines, which they determine based on the cost-per-ton of waste produced.

Where to apply: Your city, county, or state's local environmental agency

Special state permits and licenses

Most states oversee businesses that sell regulated substances like alcohol, firearms, and lottery tickets. These licenses often show that your business has met specific state-regulated standards. To learn about your state's special licenses, look into the U.S. Small Business Association or your local small business development center.

Alcohol sales and production

Needed for: Selling alcohol at a bar, restaurant, or retail storefront. Production and transport may also require a permit. On top of your state guidelines, you may also need federal approval to operate your business.

Where to apply: Your state's alcohol commission or liquor authority

Casino operation

Needed for: Owning, overseeing, or working at a casino. Some states offer a general license that applies to all casino operations. In other states like Nevada, you need a permit for every individual game and activity. Online businesses that offer gambling services also need special permits.

Where to apply: Your state's gambling commission

Special federal permits and licenses

You may need a federal license or permit to conduct business regulated by federal agencies. Examples include the sale or manufacture of firearms, commercial fishing, and the import or export of wildlife.

We'll outline the most common federal licenses below. Keep in mind that federal agencies offer different permits with varying costs depending on the exact nature of your work.

Agriculture

Needed for: Transporting or producing animals, animal byproducts, biologics, or plants. Even if you aren't a farmer or rancher, professionals who work with plants or animals in any capacity may need this license.

Where to apply: U.S. Department of Agriculture

Aviation

Needed for: Operating an aircraft, transporting passengers or cargo via air, and performing maintenance on an aircraft.

Where to apply: Federal Aviation Administration

Broadcasting

Needed for: Broadcasting entertainment or information via television, radio, wire, cable, or satellite.

Where to apply: Federal Communications Commission

Pharmaceutical drugs

Needed for: Operating or owning a facility that manufactures FDA-approved pharmaceuticals. In addition to drug manufacturing, selling pharmaceuticals requires additional local permits.

Where to apply: Food and Drug Administration

Fish and wildlife

Needed for: Engaging in wildlife-related activities for your business. These include hunting, transporting animals, and shipping wildlife byproducts.

Where to apply: U.S. Fish and Wildlife Service

Firearms, explosives, and ammunition

Needed for: Manufacturing, selling, or shipping firearms, explosives, and ammunition.

Where to apply: Bureau of Alcohol, Tobacco, Firearms, and Explosives

Investment advising

Needed for: Providing financial advice on securities to clients.

Where to apply: U.S. Securities and Exchange Commission

Maritime transportation

Needed for: Transporting passengers or cargo via sea travel.

Where to apply: Federal Maritime Commission

Mining and drilling

Needed for: Mining and drilling operations that yield or distribute coal, oil, and other power sources.

Where to apply: Bureau of Safety and Environmental Enforcement

Nuclear energy

Needed for: Operating a facility that deals with nuclear reactors, materials, or waste.

Where to apply: U.S. Nuclear Regulatory Commission

Preparation of meat products

Needed for: Preparing, handling, or serving meat products or similar animal products at a restaurant or grocery store.

Where to apply: Food and Drug Administration

Transportation and logistics

Needed for: Operating or overseeing the use of overweight vehicles to transport passengers or cargo. Ground transportation licenses often differ from maritime transportation licenses.

Where to apply: U.S. Department of Transportation and Federal Motor Carrier Safety Administration

Leverage your permits

While the time and money needed to apply for professional licenses can be steep, the return on investment is even greater. Even if you don't need a permit to operate, certifications open the door to extra-legal protections, improved credibility, and can create more funding opportunities.

Remember that most business permits expire after one to three years. Some health permits, for example, must be renewed annually—so staying on top of licensure will avoid legal trouble or damage to your reputation. At the end of the day, business licenses do more than help you avoid fines. They hold your service to the highest possible standard.