Business Licenses and Permits Your Startup Needs
Find out which business licenses and permits your startup needs — from general business licenses and seller's permits to federal and zoning requirements. A plain-language guide for new business owners.
Bizee Editorial Staff
Editorial Team
Introduction
Most startups need at least a general business license, and many need additional permits depending on their industry, location, and whether they sell physical goods. The specific licenses and permits you need depend on what your business does, where it operates, and which government agencies oversee your industry.
What is a business license?
A business license is official authorization from a government authority — typically a city, county, or state — that allows you to operate your business in a specific location. It confirms you've met the minimum requirements to conduct business legally and that your business is registered with the appropriate agency.
Most general business licenses are issued at the local level — your city or county — and need to be renewed periodically. Some states also require a separate state-level business license depending on your business type. Before you can get one, you'll typically need to show your business name, structure, and address, and in some industries, proof of relevant credentials or training.
A business license is not the same as forming an LLC or corporation — registration with the state creates your legal entity, while a business license authorizes you to operate. Many new business owners don't realize they need both.
What is a business permit?
A business permit is authorization from a government agency — state, federal, or local — that allows you to conduct a specific activity or operate in a specific way. Unlike a general business license, permits are usually tied to a particular function: selling food, handling hazardous materials, building out a physical space, or operating in a regulated industry.
Permits are often issued after an inspection or review. A health department permit for a restaurant, a building permit for a renovation, or a zoning permit for a home-based business all follow this pattern — the agency checks that your setup meets the relevant standards before approving you to operate.
The practical difference: a business license says you're allowed to be in business. A permit says you're allowed to do a specific thing. Most businesses need both.
Licenses and permits needed to start a business
The licenses and permits you need depend on 3 factors: what your business does, where it's located, and which government agencies regulate your industry. There's no single universal list — a freelance graphic designer and a food truck owner have almost nothing in common when it comes to licensing requirements.
That said, most startups will need to address at least a few of the same categories. A general business license from your city or county is the most common starting point. If you sell physical goods, a seller's permit is usually required. If you have employees or operate as a corporation or partnership, you'll need an Employer Identification Number (EIN) from the IRS. And if your business operates from a physical location — including your home — local zoning requirements may apply.
The SBA's licensing and permits guide is a reliable starting point for figuring out which federal, state, and local requirements apply to your business.
Common types of business licenses and permits
Most startups encounter a handful of license and permit categories regardless of industry. Here are the ones that come up most often.
General business license
This is the baseline authorization to operate a business in a specific city or county. Most local governments require one regardless of your industry. Requirements, fees, and renewal schedules vary by jurisdiction — check with your city or county clerk's office to find out what applies to you.
Seller's permit
A seller's permit — also called a sales tax permit — authorizes your business to collect sales tax from customers and remit it to the state. If you sell tangible goods or certain taxable services, you'll need one in every state where you have nexus (a taxable presence). This is separate from a general business license and is issued by your state's department of revenue or equivalent agency.
Professional or industry-specific license
Certain professions require a state-issued license before you can legally practice — things like contracting, cosmetology, real estate, healthcare, and financial advising. These are issued by state licensing boards and typically require passing an exam, completing training hours, or both. If your business involves a licensed profession, this requirement applies to you personally, not just your business entity.
Zoning and home occupation permit
Zoning regulations determine whether your business activities are allowed at a specific address. If you're running a business from home, many municipalities require a home occupation permit to confirm your operations don't conflict with residential zoning rules. Check your local zoning ordinances before you start — operating without the right zoning approval can mean fines or being required to relocate.
Employer Identification Number (EIN)
An EIN is a federal tax ID issued by the IRS. It's required if your business has employees, operates as a corporation or partnership, or files certain tax returns. Sole proprietors without employees can use their Social Security Number instead, but an EIN keeps your personal number off business documents and is required to open a business bank account. You can apply for an EIN free at irs.gov/ein — most applications are approved instantly.
How licensing requirements vary by state
State licensing requirements vary more than most new business owners expect — what's required in one state may not exist in another, and the agency that issues a license in one state may be completely different from the one that handles it next door.
Some states require a statewide general business license in addition to any local license. Others handle everything at the city or county level. Regulated industries — healthcare, construction, food service, childcare — almost always have state-level licensing requirements on top of local ones. Your state's Secretary of State office or department of revenue is usually the right starting point for figuring out what applies to your business.
If you sell goods or services in multiple states, you may need to register for a seller's permit in each state where you have nexus — not just your home state. This catches a lot of ecommerce businesses off guard.
Federal permits: who needs them
Most small businesses don't need a federal permit. Federal permits apply to specific heavily regulated industries where a federal agency — not a state — oversees the activity.
Industries that typically require federal permits or licenses include agriculture (USDA), alcohol production and sales (TTB), aviation (FAA), firearms and explosives (ATF), commercial fishing (NOAA), and broadcasting (FCC). If your business falls into one of these categories, federal licensing is a requirement you can't skip — operating without it puts your business at risk of fines or being shut down.
For most service businesses, retail operations, and professional practices, federal permits aren't part of the picture. Your licensing requirements will be at the state and local level.
FAQ
No. A seller's permit and a business license are 2 different authorizations. A business license is general permission to operate your business in a specific location, issued by a city or county. A seller's permit — also called a sales tax permit — authorizes you to collect and remit sales tax on taxable goods or services, and is issued by your state's revenue agency. Most businesses that sell physical products need both.
It depends. Some very small or informal businesses — a sole proprietor doing occasional freelance work, for example — may not be required to hold a general business license in every jurisdiction. But most businesses that operate from a fixed location, sell goods, or work in a regulated industry do need at least one license or permit. There's no universal exemption. Check with your city or county and your state's business licensing office to confirm what applies to your specific situation.
Yes, in most cases. Forming an LLC creates your legal business entity with the state, but it doesn't automatically authorize you to operate in a specific location or industry. Most LLCs still need a general business license from their city or county, and may need additional permits depending on what the business does. Forming an LLC and getting a business license are separate steps — you'll typically need to do both.
Start with your city or county clerk's office — that's where most general business licenses are issued. You'll typically need your business name, legal structure, address, and a description of what your business does. Some jurisdictions let you apply online; others require an in-person visit. Fees vary by location. For state-level licenses or industry-specific permits, check your state's Secretary of State website or the relevant licensing board for your profession.
Not always, but you'll likely need one soon after. Some jurisdictions ask for an EIN on the business license application, especially if your business has employees or operates as a corporation or LLC. Even if it's not required for the license itself, you'll need an EIN to open a business bank account, hire employees, and file business tax returns. Applications are free at irs.gov/ein and most are approved instantly.
It depends on your industry, location, and business structure. Most businesses need a general business license from their city or county. Businesses that sell physical goods typically need a seller's permit from the state. Regulated industries — healthcare, food service, construction, financial services — require professional or industry-specific licenses. Businesses with employees need an EIN from the IRS. And any business operating from a physical location should check local zoning requirements.