Just like getting a driving license before taking your car on the road, you need the appropriate business licenses before opening your doors to the public. These licenses help the government track the commercial activity in the state and also protect consumers by ensuring regulations are being followed. What licenses you need to get will depend on where you are located, and the type of goods or services you plan to offer.
The term business license may refer to any number of permits and licenses regulated by federal and state agencies. While some states and counties require all businesses to have a license, in other areas, sole proprietors may be able to provide certain types of services without any type of license. Many other licenses are particular to the profession, service, or goods offered to the public.
You will find as many categories of business licenses as there are types of business. Here are some of the more common licenses:
Basic Business License: This may be required at the city, county, or state level for all businesses. In some areas, sole proprietorships and partnerships may be exempt from this requirement.
Seller’s Permit: If you are selling tangible goods, you may need a seller’s permit from your state tax department. This is common in locations that have sales tax.
Professional License: Certain professional agencies, like those regulating dentists or accountants, require individuals providing those services to first obtain a license from the regulating professional agency. Other professional licensing may be optional, such as licensure for bookkeepers.
Agricultural License: There are different licenses depending on the products sold or manufactured, such as milk products, produce, livestock, or meat products. If your business imports or transports animals across state lines, you may also need a license from the U.S. Department of Agriculture.
Licenses to Sell Food or Drinks: If your business sells food or drinks, whether you have a restaurant or you sell packaged goods to retail stores, you likely need licenses such as a food handler’s permit or a commercial kitchen permit. If you operate a food truck, you may need a specialized mobile food permit.
Liquor License: If you plan to manufacture or sell alcohol, be sure to research liquor licensing requirements. The particular license may differ depending on whether your business sells directly to consumers in a retail establishment, or if you are a brewer or distributor selling to other businesses. If you plan to import or wholesale alcohol, you must also obtain a permit from the federal Alcohol and Tobacco Tax and Trade Bureau.
Marijuana Business License: To sell, manufacture, or cultivate marijuana in a state where recreational or medicinal cannabis is legal, you likely need a specialized license. You may have to apply for both state and city or county licenses.
Music and Entertainment Licenses: If you want to have music, live or recorded, played at a space open to the public, you likely need a license through the American Society of Composers, Authors, and Publishers (ASCAP), a national organization. This license ensures that the copyright owners of the material are paid. In addition, you may need an entertainment license from your state or county agencies if you plan to have live performances.
It is essential to have your licenses in place before opening your doors to business. Depending on the particular license, you could face serious fines, and in some cases, your business could be shut down. It may even be illegal, such as running an unlicensed cannabis company, which could lead to additional fines and a jail sentence.
Because of these repercussions, and the huge variety of licenses that may be required, be sure to take your time to research the requirements with each agency. Begin by reviewing the 50-state guide on business licenses for information tailored to your state. In some cases, the best way to ensure you are in compliance is to consult with a local business attorney.
Each business license is regulated by a particular state or federal agency. For a general business license, check with your secretary of state or the department of taxation. For other licenses, you will likely file with specialized agencies for the particular business area. For instance, check with the agency that regulates food safety for all food-related permits.
Applying for these business licenses often involves more than filing paperwork. Many businesses are highly regulated, and the permitting process is how you demonstrate to the state that you are in compliance with all the rules. The application process may involve submitting to inspections, acquiring zoning approval letters, or attending hearings.
The cost differs drastically depending on the permit. While a basic business license could be as low as $50 in some states, permits for a marijuana business could run into the tens of thousands of dollars. Once you have the license, many of these licenses have ongoing requirements, such as annual filings and fees.
Once you have an idea of the types of business licenses you will need, the next step is to obtain the license in your state. Each state has different requirements -- some states have local business licenses, while others have statewide licenses. Select your state from the list below to learn more about your specific state's requirements and where you can obtain the proper licenses.
District of Columbia