How To Get A Business License: Expected Costs, Timeline, & Resources
Do you need a business license for your small business? Find out all you need to know in our guide to business licenses.
A business license allows you to legally operate your small business in your city, state, and county. Even home-based businesses need a license to operate within city limits! And you might even need more than one.
The guidelines for business licensure are designed to protect businesses and consumers from unsafe practices, create a common language for small business owners within a geographic jurisdiction, and regulate businesses in a common location. The requirements and fees vary by state.
Read on to learn how to get a business license and the types of business licenses available.
Table of Contents
- What Is A Business License?
- Types Of Business Licenses
- How Much Does It Cost To Get A Business License?
- How Long Does It Take To Get A Business License?
- How To Get A Business License, Step-By-Step
- Get Started With These State & Federal Resources For Business Licenses
- The Final Word On Business Licenses
- Business License FAQs
What Is A Business License?
A business license is a non-negotiable permit that allows you to operate your business in compliance with your federal, state, and local government. It proves that you have the authority and permission to conduct your business operations. This keeps you accountable to the city in which you operate and helps local government agencies regulate the businesses in their jurisdiction.
Do You Need A Business License?
Apart from some freelance work and sole proprietorships, the answer is oftentimes yes. Forgoing a business license could make you liable for major damages and fines. You might even have to shut down your business.
Overall, the types of licensure required will largely depend on:
- The type of business you operate
- Where your business operates
- How many employees you have
Types Of Business Licenses
Many different types of business licenses are available. Generally, they’re divided into federal, state, and city/county licenses. You will want to research licensure specific to your business industry and your city, state, and county. The regulations set by government agencies relevant to your business’s industry will determine what licenses you need.
Federal VS State VS City & County Licenses
Most licenses, permits, and certifications are based on your business’s location. Start with getting a business license through your city or county. You can find the applications online or at the city hall/with the city clerk. Metropolitan areas might offer a single business license form for several counties to help businesses that may travel frequently between cities and counties to operate.
State license requirements vary state by state, and some don’t require state-specific licensure. California and Oregon, for example, have no state requirements; all licensing happens at the city level. For the rules in your state, check your state’s government website — we’ve provided links further down.
According to the Small Business Administration (SBA), you will need a federal business license if a federal agency manages your business. The types of federal licenses are listed below.
Common Types of Licenses
Requirements differ vastly from state to state and industry to industry. You even may need several types of licenses. As you research which license options are required for your city and industry, you might see these types of licenses available for you:
- Local Business License: All businesses will need a local business license from the city in which they’re located.
- Seller’s Permit/Sales Tax License: This type of license/permit is what a business will need to collect sales tax from its customers.
- Peddler’s License: If your business plans on selling door-to-door, your county might require a peddler’s license.
- Cleaning/Janitorial License: A cleaning or janitorial business might require a cleaning/janitorial license depending on state requirements. However, cleaning companies need to be licensed and bonded as clients have come to expect that assurance.
- Gardening & Landscaping License: Same as cleaning/janitorial, certain licenses in some states are required for people working on gardening and landscaping. Many states require landscaping businesses to be bonded and insured.
- Food Handling License: If your business serves food, there are state-specific food handler’s licenses that everyone working with food will need to obtain. A food handler’s license will show that you have the required information about food safety including proper cleaning, preparation, and storage.
- Contractor/Tradesmen License: If your work involves plumbing, electrical, HVAC, or gas fitting, you’ll likely need to acquire a license through the state you operate in.
- Beauty Salon/Cosmetology License: All workers in a beauty salon must be licensed by the state. While these licenses are the responsibility of the individual cosmetologists, an owner of a salon should be acquainted with the rules and regulations regarding licensure and renewals.
Most small businesses do not need a federal license unless they fall into a specific industry that requires one.
According to the SBA, the industries that require federal licenses for small businesses are in the following categories:
- Agricultural: You will need this license from the US Department of Agriculture if you transport animals or animal products, biologics and/or biotechnology, or plants across state lines.
- Alcoholic Beverages: If you manufacture, wholesale, import, serve, or sell alcoholic beverages, your business will need licenses issued both by your state/local alcohol control board and the federal Alcohol and Tobacco Tax Trade Bureau.
- Aviation: If your business involves aviation maintenance, operating aircraft, or transporting people/goods via air, you will need a license from the Federal Aviation Administration.
- Commercial Fisheries: If your business involves commercial fishing, you will need a license from National Oceanic and Atmospheric Administration Fisheries Service.
- Firearms, Ammunitions, & Explosives: If your business manufactures, deals, and imports firearms, ammunitions, and explosives, you will need a license from the Bureau of Alcohol, Tobacco, Firearms, and Explosives.
- Fish & Wildlife: If your business involves the import/export of wildlife or derivative products, or actual wildlife, then you will need a license from the US Fish and Wildlife Service.
- Maritime Transportation: If you provide transportation on the ocean or if you are a company that ships products by sea then you will need a license from The Federal Maritime Commission.
- Mining & Drilling: Submit a request for a permit from the Bureau of Safety and Environmental Enforcement if your business drills for natural gas, oil, or any other minerals on federal land. You can also view approved permit applications to help guide the process.
- Nuclear Energy: For all those small businesses out there who produce nuclear energy, or are in the business of nuclear distribution or disposal, please get a license from the US Nuclear Regulatory Commission.
- Radio, Television, & Broadcasting: Businesses that broadcast via radio, television, wire, or cable will need a license from the Federal Communications Commission.
- Transportation & Logistics: Transportation permits are handled by state offices, but the US Department of Transportation can direct small businesses to the right department.
How Much Does It Cost To Get A Business License?
The cost to acquire and renew a business license will vary depending on your business’s location, size, operations, and risks. When you apply, you will pay for processing fees and the license itself. Some licenses have an expiration date: always check to see when to renew and how much it costs.
Expect to pay anywhere around $50 to a few thousand dollars for a business license.
Just as an example, in LA County, California, the cost to acquire a license for a restaurant will range from $319 to $1,430 depending on the number of seats whether it’s low or high-risk. The fees for square footage can go as high as $1,341 if the restaurant has over 2,000 square feet and is high-risk.
How Long Does It Take To Get A Business License?
The time it takes to get your license will largely depend on your business’s industry and the city/county/state or federal office you’ve applied through. After filling out the applications and paying the fees, you will usually have to wait anywhere between a couple of weeks to a few months before your license is official. Online applications usually speed up the process.
A smaller city might have quicker processing times, and county offices will be generally faster than federal offices. Always check with the government agency you’re applying through, and account for this time when you apply for your license — don’t wait too long to get your business legal and compliant. If you’re in a hurry, an expedited permit may be available for an additional fee.
How To Get A Business License, Step-By-Step
For most small business owners, the nitty-gritty of licenses, permits, certifications, and paperwork is not nearly as exciting as some of the other aspects of entrepreneurship. However, applying for a license is a monumental and important task when starting a business. It can be accomplished with some easy steps:
- Form A Business Entity And Get An EIN: First, you should decide on a business structure and register your business with your city/county and state from there. Once you’ve done that, you can easily apply for an EIN through the IRS for free online. Sole proprietors without employees won’t need an EIN and can use their social security number for tax-related purposes. If you aren’t certain which structure is the best for your business, you can learn more about the types of business structures here.
- Research Your City/County & Industry’s Licensure Requirements: The bulk of your time in the licensing process will be researching which licenses and permits are needed. If that seems overwhelming or you want to ensure you don’t miss any important components, you may hire a business law attorney or use SBA’s local assistance helper to find free help in your state. Merchant Maverick’s tip is to create a spreadsheet listing all the permits needed, the permit’s issuing authority, the cost of the permit, your application date, and the renewal date. Most applications need a business code and name, so research your industry’s business code.
- Gather Any Necessary Documents: Different states and cities will require different information from small businesses applying for a license. Some states and industries require proof of insurance before a license is issued, for example. Generally, you’ll want documents that contain information such as:
- Business address
- Name of business
- Name of business owner
- Number of employees
- Federal ID number/EIN
- Locate & Fill Out Application Forms: Use local websites and/or the SBA website to locate the necessary license application forms. Submit your application, pay the fees, and sit back.
- Display The License When It Arrives: Some city locations might require the business owner to come and pick up the license at the office. Other entities will mail the license. When the license arrives, check with the issuing body to see if there are requirements for posting the license in a visible spot in your business location. Make a note of the renewal date and keep on top of making sure your licensure is current.
Get Started With These State & Federal Resources For Business Licenses
At this point, you’re likely wondering, “Where do I get the license I need for my business?” Underneath you’ll find resources and government websites that will better direct you to the information you need — and put you a few steps closer to getting your business license!
Federal Resources For Business Licenses
There aren’t many businesses in the US that require a federal license, but if your business belongs to an industry that needs one, chances are you already know. The SBA has a full list of federally regulated businesses. You can also find the agencies that will issue the necessary licenses.
State Resources For Business Licenses
Each state, county, and city offers different license requirements and fees. State websites will often direct you to the local counties that operate as issuing boards for licensure.
- Alabama: All businesses must register with the Alabama Department of Revenue for a privilege license to conduct any business in the state. You will need to acquire a license directly through your local county, and your county’s contact information can be found on the Alabama League of Municipalities website. Small business owners in Alabama can also research the state’s requirements and gather information on licenses and taxes at AtlasAlabama, which is an initiative of the Alabama Small Business Commission.
- Alaska: Businesses in Alaska can register online through Alaska’s Department of Commerce, Community, and Economic Development. The website provides great information about licensing in the state and offers an immediately downloadable license if you qualify.
- Arizona: Small business owners in Arizona can register through the Arizona Department of Revenue.
- Arkansas: Business owners in Arkansas will need to check with the Government of Arkansas’s website in their business section to see what rules/regulations apply. Businesses will need to register with the state in order to collect and pay taxes.
- California: Small business owners in California should use the Governor’s Office of Business and Economic Development to ask questions about business and business licensure in the state. Businesses should also check with the Department of Consumer Affairs, where you can find a link to online business licensure forms and up-to-date information about California’s licensing boards.
- Colorado: MyBizColorado is the state’s website for online forms and business licensure information. Coloradans can also check out business information, see what businesses need a license, and file with the state on the Secretary of State website.
- Connecticut: Small business owners can use Connecticut’s government website for a step-by-step guide to registering and licensing a business in the state. You will need to use the myconneCT government portal to file your application.
- Delaware: Check out the Delaware Government’s Division of Revenue to use their small business license checklist.
- Florida: Florida’s government website has a checklist on starting a business that discusses licensure information. Small business owners can also check licensure requirements on the Department of Business and Professional Regulation website.
- Georgia: Small business owners in Georgia can apply for a license online with the Georgia Secretary of State.
- Hawaii: To register your business in the state of Hawaii, visit the Hawaii Business Express or check for licensure requirements with the Hawaii Department of Commerce.
- Idaho: Small business owners in Idaho can use the state’s Business Wizard to ask questions or fill out an online form for licensure.
- Illinois: The Illinois government has access to license and permit information on its website.
- Indiana: According to the Indiana government’s website, “Indiana does not have any one single, comprehensive business license.” Instead, the government has provided a Business Owner’s Guide to walk small business owners through the process of becoming compliant in Indiana.
- Iowa: Iowa’s licensing requirements are determined primarily by industry. Licensing information can be found on the Iowa Economic Development Authority website.
- Kansas: Business owners in Kansas can find information on licenses located on the Kansas Government’s Department of Revenue website.
- Kentucky: Kentucky’s One Stop Business Portal includes a search for whether or not licensure is needed for your particular industry.
- Louisiana: In order to apply for licensure in the state of Louisiana, small business owners need to create an account at geauxBIZ — the government’s program for processing all business registration.
- Maine: All small business owners in Maine will need to apply for licenses at the city or county level. Maine’s Government website has a link to assist with searching which town or office business owners will need to visit to apply.
- Maryland: Small business owners in Maryland can contact Maryland’s Department of Labor, Licensing, and Regulation for a list of agency contacts and general information about licenses based on industry.
- Massachusetts: Information about licenses and permits for businesses in Massachusetts can be found on the Massachusetts Government website. From there, business owners can check to see if licenses are needed, check the status of a license, or apply online.
- Michigan: Small business owners can find answers to their licensing questions at the Michigan Small Business Development Center. Not every business in Michigan needs a business license, so you can check to see if you need one at the Michigan State License Search site.
- Minnesota: General information about Minnesota and small business license requirements can be found on the Licenses and Permits section on the Minnesota Government’s website. Businesses can also search for licensing agencies via the License Minnesota E-licensing portal.
- Mississippi: Small business owners should use the services on the Mississippi Small Business Development Center website to determine the state and local requirements for business licensure. The state of Mississippi also has a One Stop Shop Business website to help answer FAQs for small business owners.
- Missouri: Small business owners can register their business with the Secretary of State and the Department of Revenue at once through the Missouri Business Portal.
- Montana: The great state of Montana’s licensing mostly happens at the local level. To see if your small business needs a license in Montana, check out the Montana License Lookup to check both state and local licensure requirements. For other business questions regarding licensing, owners can check Montana’s Small Business Development Network.
- Nebraska: Nebraska’s Secretary of State provides information on its website in the Licensing Division about requirements for small business licensure in the state.
- Nevada: The SilverFlume Business Portal contains a step-by-step guide to small business licensure in the state of Nevada.
- New Hampshire: New Hampshire has various licensure requirements for small business owners and the Department of Revenue website answers license FAQs. According to their site, “Regulated businesses may be subjected to certification, registration or accreditation and may experience routine inspections. Trades such as accounting, architecture, child-care, chiropractors, restaurants, and many more quire permits in order to being operation.”
- New Jersey: Small business owners in New Jersey check the New Jersey Business Portal for an extensive list of license and permit news.
- New Mexico: Licensing requirements in New Mexico vary between counties and municipalities. Small business owners can check the New Mexico Regulation and Licensing Department to check for online applications for common licenses.
- New York: The New York State Business Express website contains a Business Wizard with business checklists to walk small business owners through the process of discovering what licensure requirements exist for their industry.
- North Carolina: “The State of North Carolina does not issue a single business license. Your business may be subject to state, city, county and/or federal requirements,” according to the website for the Economic Development Partnership of North Carolina.
- North Dakota: State of North Dakota provides licensing information on the North Dakota New Business Registration website.
- Ohio: All businesses in Ohio need to register with the Secretary of State. Small business owners can find a comprehensive list of licensing and license agencies on Ohio’s government website.
- Oklahoma: In Oklahoma, you don’t need to obtain general business licenses. However, certain industries will require special licensing. You’ll need to check out the Department of Commerce’s website to see if your industry applies as well as to see if you need any other requirements as an employer.
- Oregon: In Oregon, you’ll want to visit the Oregon Secretary of State’s website to get started. There you’ll find a step-by-step plan for starting your business, and you’ll be redirected to the Business Xpress website for specifics on licenses and other certifications you may need.
- Pennsylvania: The Keystone State also has an online portal that lets you quickly handle all of your licensing needs. The Pennsylvania Licensing System is a one-stop shop for all things licensing.
- Rhode Island: Rhode Island provides forms on its business website. There is also a feature that allows you to search through the types of licenses your business might need by industry, and there is a helpful guide of things you’ll need to get your business up and running.
- South Carolina: There isn’t an overarching state business license in South Carolina, but individual cities will require their own licenses. To figure out what you’ll need, you’ll want to head to the state’s website where you can register your business, and apply for and renew licenses. There are also links and portals to other useful services for small businesses just starting out.
- South Dakota: Check out South Dakota’s state website for a variety of links related to new business owners. You can download licensing forms there and register your business. You can also search to see if your particular business will need more than one type of license.
- Tennessee: The Tennessee Department of Revenue says that “If you are subject to the business tax, you must register to pay the tax.” If your business generates more than $3,000 a year, but less than $10,000, you will need a minimal activity license.
- Texas: Small business owners can check with the Texas Department of Licensing and Regulation for a list of industries where licenses are needed and a list of issuing agencies in the state.
- Utah: Use the OneStop Online Business Registration portal to register your business with Utah’s Department of Commerce. You must also acquire a business license through your city and/or county, all of which are listed on the department’s business license guide. The guide also includes information to connect owners to the state’s free services at the Small Business Development Center.
- Vermont: Vermont’s Department of Taxes small business guide recommends registering with the Secretary of State and to use the resources at the SBA about license requirements.
- Virginia: Virginia’s City Applications informational site contains information about Virginia’s business licenses. The site says, “The common form of local business license in Virginia is the license tax. Typically, this is an annual application that all businesses must file where the fee is a calculation based on your gross receipts from the previous year.”
- Washington: The Washington State Department of Revenue’s Business Licensing Wizard will walk small business owners through a business activity search to determine what type of license a small business might need.
- Washington DC: All businesses in DC will need to register with a Basic Business License. Some categories are able to apply and print their license immediately.
- West Virginia: According to the West Virginia State Tax Department, “Before engaging in business activity in West Virginia, every individual or business entity must obtain a West Virginia business registration certificate from the State Tax Department.” Small business owners can also check out the WV One Stop Business Portal.
- Wisconsin: The State of Wisconsin’s Department of Agriculture, Trade, and Consumer Protection has an A-Z list of business licenses available in the state.
- Wyoming: The Wyoming Business Council’s licensing and permitting FAQs have numerous resources for small business owners.
As you can see, each state differs in its license requirements, and it’s no small task to research your own state and industry requirements. Use the Small Business Administration guidelines as a resource, and use their free access to SCORE for business counseling if you feel overwhelmed.
The Final Word On Business Licenses
Starting a business is exciting, but the paperwork might seem exhausting. With this important step out of the way, you’ll be that much closer to your dream. Remember: check with your local and state governments online to figure out what’s required of you as you apply for a business license. You might end up needing more than one. So, factor that into your startup costs, and make sure you give yourself enough time to have your license become official after applying.
Are you still in the beginning stages of starting your business? Check out our resources on which types of business insurance you might need.