How to Get a Business License

It's essential that you have the necessary business licenses before opening your doors to the public. This guide discusses general business licenses, sales tax licenses, regulatory permits, and professional licenses.

By , Attorney · Penn State Dickinson School of Law
Updated by Amanda Hayes, Attorney · University of North Carolina School of Law

Just like getting a driver's license before taking your car on the road, you need the appropriate business licenses before opening your doors to the public. State governments use business licenses to track commercial activity within the state and to protect consumers by making sure regulations are being followed.

What licenses you need to get will depend on where your business is located and the type of goods or services you plan t to offer.

What Is a Business License?

The term business license can refer to any number of permits and licenses regulated by federal, state, and local agencies, including licensing boards.

While some states and counties require all businesses to have a license, in other areas, sole proprietors might 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.

In some cases, you'll need to apply for a special permit along with a business license. For example, you might need to obtain a business license from the state to do business and then obtain a special permit from the city to conduct that business on a particular piece of land.

Common Business Licenses

You'll find almost as many categories of business licenses as there are types of business. Here are some of the more common licenses:

General Business License: This basic license might be required at the city, county, or state level for all businesses that want to operate in a particular area. In some places, sole proprietorships and partnerships can be exempt from this requirement.

Seller's Permit: If you're selling tangible goods, you might need a seller's permit from your state tax department. This permit requirement 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 can be optional, such as licensure for bookkeepers. Some professions require the individual to get a license while other professions require both the individual and business to have a license. For example, your state might require a CPA firm along with all the individual CPAs working for the firm to each have a license.

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 might also need a license from the U.S. Department of Agriculture.

Licenses to Sell Food or Drinks: If your business sells food or drinkswhether you have a restaurant or you sell packaged goods to retail storesyou likely need licenses such as a food handler's permit or a commercial kitchen permit. If you operate a food truck, you could 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 can differ depending on whether your business sells directly to consumers in a retail establishment (such as a bar or liquor store), or if you're 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 could need to apply for both state and city or county licenses. You could also need to obtain a license for each business activity—for example, a cultivation license, a manufacturing license, and a dispensary license.

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 could need an entertainment license from your state or county agencies if you plan to host live performances.

Are Business Licenses Required?

It's 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 might 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 might be required, be sure to take your time to research the requirements of each agency. Begin by reviewing the state guide to business licenses for information tailored to your state. In some cases, the best way to ensure you're in compliance is to consult with a local business attorney.

How to Apply for Business Licenses

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'll 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..

Federal Business Licenses

The federal government oversees various industries. For example, various federal agencies regulate banks, automobiles, food and drink, agriculture, pharmaceuticals, alcohol, tobacco, broadcasting, and more.

For information on federal licenses and permits, you can visit these resources:

  • U.S. Small Business Administration (SBA): The SBA has a licenses and permits webpage that provides a list of business activities and their accompanying issuing agency. The SBA also offers a guide to staying legally compliant that includes a section on licenses, permits, and recertification.
  • Federal Trade Commission (FTC): The FTC is responsible for regulating trade and protecting consumers from unfair or deceptive trade practices. The FTC's business guidance webpage provides industry-specific information and resources to make sure your small business follows federal regulatory rules and requirements.
  • Internal Revenue Service (IRS): Check out the Industries, Professions, and Business Tax Centers webpage for information related to your tax obligations.

State and Local Business Licenses

Regardless of whether you need a federal license, you'll probably end up needing a state or local business license or permit. Many of these licenses and permits are regulatory, covering matters like sales tax, the environment, and health and safety.

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're in compliance with all the rules.

The application process can involve:

  • submitting to inspections
  • acquiring zoning approval letters, and
  • 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.

How to Obtain a Business License in Your State

Once you have an idea of the types of business licenses you'll 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.

How to Obtain a Business License in Arizona

If you're starting an Arizona business, you'll need to determine which business licenses and permits your small business needs, if any.

General business license. Arizona doesn't require a statewide general business license. But you'll probably need to get a business license from your city or town.

Transaction Privilege Tax (TPT) license. This license is required for businesses that will sell products or engage in certain types of activities. The TPT license is similar to what in other states would be called a "sales tax license." The Arizona Department of Revenue has a step-by-step guide on how to apply for a TPT license and set up your tax account.

Regulatory licenses and permits. The Arizona Commerce Authority has a page dedicated to business licensing and permits. You can find information on where to look for applicable licensing laws and which types of businesses require licenses at the state and local levels. The webpage also has information about industry certifications.

Regulatory licenses and permits might cover, for example, activities affecting the environment or health and safety. They may be issued by, for example, the Arizona Department of Evironmental Quality or the Arizona Department of Health Services.

Professional licenses. Depending on your occupation or profession, you could need to get a license from the state. Arizona's state website has a modest webpage on professional licenses. You should also visit the website for your profession or occupation for more information.

How to Obtain a Business License in Illinois

Looking to start a business in Illinois? You'll need to make sure you've got all your required licenses and permits before you begin operations.

General business license. Illinois doesn't require businesses to obtain a general business license to operate within the state. But you should check with your city or county for local licensing requirements.

Sales tax permit. If your business will sell tangible, personal property, you must get a sales tax permit from the state. You can register your business online with the Illinois Department of Revenue.

Regulatory licenses and permits. Different regulatory licenses are issued by different state agencies. For example, environmental permits can be issued by the Illinois Environmental Protection Agency and employment-related licenses can be issued by the Illinois Department of Labor. Check the Registration, Licenses, & Permits section of the Illinois state website for more information.

In addition to licenses and permits issued by the state, some required business licenses are issued locally. The requirements vary depending on the city or county involved. For example, the City of Chicago has its own licensing requirements. You can find more details by checking the website for the city and county where you'll operate your business. (Some businesses may be exempt from local licensing requirements under state or federal law.)

Professional licenses. Many professions and occupations require a license from the State of Illinois. The Illinois Department of Financial and Professional Regulation (IDFPR) regulates nearly all of these professions and occupations. Each profession and occupation also is more directly regulated by its related state regulatory board. The IDFPR website provides a list of occupations and professions that it regulates. By clicking on an item on the list you can get detailed information about each license, such as its application forms, renewals, notices, resources and publications, laws and rules, board information, and other contact information.

For example, suppose Arthur wants to work as a licensed speech-language pathologist and audiologist. He'll need to apply for a license through the IDFPR. He can find detailed information and a copy of the license application by clicking on the link for Audiologist on the IDFPR-regulated professions webpage.

How to Obtain a Business License in Michigan

If you want to start a small business in Michigan, then you'll need to apply for and obtain the required business licenses and permits.

General business license. Michigan doesn't require businesses to obtain a general license at the state level. However, your local city or county will likely require your business to obtain some sort of license or permit.

Sales tax license. If your business will sell tangible personal property to consumers, then you'll need to apply for a sales tax license with the Michigan Department of Treasury. You can register your business online and receive your license in a week.

Regulatory licenses and permits. Michigan has various resources available to businesses looking to obtain licensing and permits:

  • Department of Licensing and Regulatory Affairs (LARA): You can apply for and renew a license or permit and learn about regulated products, professions, businesses, and activities.
  • State license search: Search for a particular type of license or click on a link to view an alphabetical list. This search feature provides information about each license, such as its costs, applications, renewals, forms, regulatory agencies, and FAQ.
  • Michigan's Small Business Development Center (SBDC): The SBDC can help you with many aspects of your business, such as business plans, raising capital, and financial management. Check out the small business guide to find guided steps, checklists, and resources to help you start your business in Michigan. The guide includes a breakdown of the various licenses, permits, and business regulations that might apply to your business.
  • Department of Treasury: This state government website focuses on business tax and financing issues and provides options for online business registrations. Read the sales tax license FAQ for answers to find out when and how to apply for a sales tax license.
  • Michigan Economic Development Corporation (MEDC): While not focused on licensing and permits, you can find small business assistance and resources—such as funding, training, and workforce support.

Professional licenses: If you're a member of any of dozens of professions and occupations, you'll likely need to be licensed by the State of Michigan. Among the many professions requiring state licensing are doctors, lawyers, dentists, accountants, architects, engineers, nurses, and veterinarians. You can get information about many professional and occupational licenses from the Bureau of Professional Licensing (BPL), which is a division of LARA.

For example, suppose Liz wants to open a licensed cosmetology business. She'll need to apply for a Cosmetology Establishment License with the BPL. She can find information about getting the license, as well as the application form, by going to the occupational licensing section of the BPL website and clicking on the Cosmetology link.

How to Obtain a Business License in New Jersey

If you want to open a business in New Jersey, you need to be aware of state and local license and permit requirements.

General business license. New Jersey doesn't have a general business license requirement.

Sales tax registration. If you make retail sales of products or services, then you'll need to register your business with the Division of Revenue and Enterprise Services. You can register your business online. You'll receive a registration certificate in return.

Regulatory licenses and permits. Use the New Jersey Business Portal's licensing and certification guide to search for licenses, permits, and certifications you need to operate your business. You can use the Business Portal's Navigator tool to curate a detailed guide for starting your business in New Jersey. By answering some questions related to your business, you can get a list of the licenses and permits your business needs.

Your business could need construction or safety permits, environmental licenses, or licenses or registrations required of certain kinds of businesses such as child care centers, limousine companies, and telemarketing companies. You might also need to apply for licenses and permits through your city or county.

Professional licenses. New Jersey requires some professions and occupations to have licenses. Among the many professions requiring state licensing are: doctors, lawyers, dentists, accountants, architects, engineers, nurses, and veterinarians. The Business Portal's licensing and certification guide provides information about these licenses and certifications, including how to apply for and maintain these licenses.

Additionally, the New Jersey Division of Consumer Affairs has a list of more than 50 professional and occupational boards and committees that it maintains. You can find links to these boards and committees and links to their application pages on the Division's website.

How to Obtain a Business License in Ohio

If you want to start a business in Ohio, you need to obtain the state and local licenses and permits required for your business.

General business license. Pretty much every Ohio business is at least required to register with the state. In Ohio, this registration is commonly called a "business license."

Vendor's license. If your business makes retail sales of tangible personal property or provides taxable services, you must obtain a vendor's license. You can register your business online through the Ohio Business Gateway or apply for a vendor's license through your county auditor.

Regulatory licenses and permits. You can find detailed information about the required licenses and permits for most kinds of business by going to the licenses and permits section of the Ohio state website. In addition, the start a business section of the Ohio state website provides checklists for different industries. These checklists include information about what departments and agencies regulate your industry, where to find the laws and rules that apply to your business, and application forms for permits and licenses.

Professional licenses. Ohio provides a central location for current and potential licensees to apply for and renew their professional licenses. You must create an account through eLicense to apply for and renew your license. You can also find information about professions and occupations that require a license on the above-mentioned licenses and permits webpage and checklists available on the Ohio state website.

How to Obtain a Business License in Pennsylvania

If you're looking to open a business in Pennsylvania, you need to apply for the appropriate state and local business licenses and permits.

General business license. Pennsylvania doesn't have a statewide general business license requirement. Your city or county might have a general license requirement. For example, Philadelphia requires all businesses to have a commercial activity license, and Harrisburg requires all businesses to have a business privilege and mercantile license.

Sales tax license. If your business makes taxable sales or performs taxable services in Pennsylvania, you'll need to collect and pay sales tax. While not called a sales tax license or seller's permit, Pennsylvania businesses must register with the Department of Revenue before doing business and collecting sales tax.

Regulatory licenses and permits. Different types of regulatory licenses and permits are issued by different state agencies. However, you can apply for some of the most important of these licenses and permits by filing Form PA-100, Pennsylvania Enterprise Registration. The form is used primarily to register new businesses with the state but it also contains sections for business licenses. You can complete the form on paper or online.

Professional licenses. The Department of State (DOS) has a professional licensing section on its website that lists state regulatory board contact information and other general information about many of the state's professional regulatory boards. The DOS also provides a breakdown of the license application process and individualized guides for various professions and occupations on its licensure processing guides and timelines webpage.

How to Obtain a Business License in Tennessee

If you want to start a small business in Tennessee, then you'll need to apply for and obtain the required business licenses and permits.

General business license. If your business has gross receipts between $3,000 and $100,000 in a year, you'll need to get a minimal activity license from your city or county clerk. If your business has $100,000 or more in annual gross receipts, you'll need to obtain a standard license from your city or county clerk.

Sales tax license. If you sell, lease, or rent tangible personal property or provide taxable services, you must register for a sales and use tax account with the Department of Revenue. The account acts as a seller's permit. You can register online through the Tennessee Taxpayer Access Point.

Regulatory licenses and permits. Different licenses and permits are issued by different agencies. Some of the most important issuing agencies are:

Apart from state-issued licenses, many required business licenses and permits in Tennessee are issued locally. Local business licenses often are associated with local business taxes.

Professional licenses. The Department of Commerce & Insurance (TDCI) oversees many (but not all) of the regulatory boards and commissions for licensed professions and occupations. The regulatory boards section of the TCDI website lists the professions and occupations the TCDI handles. The list runs from Accountancy to Soil Scientists. By clicking on a listed item, you'll be taken to a website with detailed information for the state regulatory board for that profession or occupation.

Some professional regulatory boards aren't handled through the TCDI. For example, boards for health-related professions are handled through the DOH's Health Professional Boards, which you can access from the DOH website.

How to Obtain a Business License in Texas

Interested in starting a business in Texas? Before you open your doors, you need to make sure you have all the required licenses and permits.

General business license. Texas doesn't require a statewide general business license. You should check with your city or county to see if they require a general license for businesses.

Sales tax license. Texas requires you to obtain a sales tax permit if your business:

  • sells, leases, or rents taxable goods
  • provides taxable services, or
  • acquires taxable goods or taxable services from out-of-state suppliers that don't hold a Texas Sales and Use Tax Permit (use tax).

You can apply for a permit online through Texas's eSystems.

Regulatory licenses and permits. The licenses and permits required for your business will depend on your industry, business structure, and location. Texas Economic Development provides licensing guidance on its start a business in Texas webpage. The Texas Business Licenses & Permits Guide provides information on more than 300 business types, including links to the appropriate state regulatory agencies, departments, and boards.

Professional licenses. The Texas Department of Licensing and Regulation (TDLR) handles licensing for a relatively small number of specialized professions and industries. You can find information for specific licenses, including:

  • applications and renewals
  • forms and publications
  • law and administrative rules
  • continuing education
  • practice standards
  • complaints and enforcement, and
  • advisory boards.

The Texas State Directory also provides a short list of agencies, boards, and commissions for different professions and occupations.

How to Obtain a Business License in Other States

Select your state from the list below to learn more about your specific state's requirements and where you can obtain the proper licenses.

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