Business Licenses

Business License Basics


If you own a business then you need a license to operate. There are many different types of business licenses and permits that are required by various government entities at federal, state and local levels.  An operating license is the basic type of business license that most all businesses will be required to have.

Each level of government has specific regulations and requirements that must be met before a business can get a license. If you don’t understand the licensing rules in your local area and follow them it could result in expensive fines and putting your business in jeopardy.

Types of Business Licenses

Federal Business Licenses – The federal government has a number of agencies that regulate and supervise business activities. If your business takes part in any of these federally regulated activities you will need to get a federal business license

Activities that will be required to get a federal business license include:

  • Alcohol manufacturing, importing and sales
  • Agriculture
  • Firearm dealing, importing and manufacturing
  • Ammunition and Explosives dealing, importing and manufacturing
  • Aviation
  • Wildlife related activity
  • Mining
  • Drilling
  • Commercial fishing
  • TV and radio broadcasting
  • Trucking

State Business Licenses – The majority of businesses will have to obtain some sort of state business license in order to legally operate. At the very least a business will need to get a professional or occupational license. State business licenses are typically used for tax purposes.

Local Business Licenses – Local government and municipalities also grant business licenses. All businesses will be required to get some sort of local business license in order to operate in their local area.

Permits – Permits are more specific to a certain type of business within an industry.

How to Get a Business License

The steps you will need to take to obtain a business license will vary depending on which type of business license you need to get.  No matter what type of license you are trying to get you will need to fill out application form(s) and supply detailed information about your business.

If you are starting a business or expanding your business you will have numerous forms to fill out. Be prepared to supply your Employer Identification Number (EIN).

The SBA (Small Business Administration) has great online tools for helping business owners figure out exactly what type of business licenses they need to get, links to websites, applications and instructions. If you’re just starting a business and need guidance on licensing, the SBA is the perfect place to learn more.

Maintaining Your Business License

Once you get your business licenses and permits you must still maintain them year after year to keep them up to date. The guidelines below are recommended if you want to ensure your business license is in good standing.

  • Make copies of your business licenses and permits.
  • Keep track of when licenses and permits need to be renewed.
  • Follow the regulations for displaying your business license.
  • If you want to change or expand your business make sure to verify whether you need additional permits or business licenses.