A long to-do list can be intimidating when starting a new business. Some of these steps, such as filing a business license application, may seem minor. Nevertheless, they can have a significant impact on your business—and your ability to stay in business.
How to get a business license, and whether you actually need one, will depend on where you plan to operate. Read on to find out if your state requires a business license, and the steps you’ll need to take in order to secure one.
This post is for information only. Requirements are updated frequently, and you should make sure to do your own research and reach out to a qualified legal adviser, if needed. Businesses outside of the United States will have different steps and requirements.
What is a business license?
A business license is a legal document issued by a government authority that permits individuals or companies to operate within a specific jurisdiction. It serves as proof of your business’s compliance with local regulations and requirements, granting you the authorization to conduct commercial activities.
Going through the process of how to obtain a business license not only legitimizes your venture but also demonstrates your commitment to operating within the boundaries of the law, fostering trust among customers, partners, and regulatory bodies.
Do you need a business license?
Whether you need a business license depends on the nature of your business and your location.
In some jurisdictions, a business license is a legal requirement for operating a business. This is especially true for brick-and-mortar establishments, where local authorities use licensing to regulate and monitor commercial activities, such as zoning compliance, health and safety standards, and tax obligations. Failing to secure the necessary licenses can result in fines and legal complications, and even shut down your business.
Online businesses may assume they’re exempt from licensing requirements. Depending on your location and the type of products or services you offer, you may still need to get the appropriate licenses to ensure legal compliance. Even if not mandated, voluntarily obtaining a business license can enhance your credibility, build trust with customers, and protect your venture from potential legal issues down the line.
Where to get a business license
When registering your business and seeking the necessary licenses and permits, there are multiple jurisdictions to consider: federal, state, and local.
At the federal level, business licenses are only required in certain highly regulated industries, and are issued by different federal agencies. These include:
- Radio and television broadcasting: Federal Communications Commission (FCC)
- Transportation and logistics: US Department of Transportation (DOT)
- Alcohol: Alcohol and Tobacco Tax and Trade Bureau (TTB) and the Department of Alcoholic Beverage Control
- Agriculture: US Department of Agriculture
- Aviation: Federal Aviation Administration (FAA)
- Firearms, ammunition, and explosives: Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF)
- Fish and wildlife: US Fish and Wildlife Service
- Commercial fisheries: National Oceanic and Atmospheric Administration (NOAA) Fisheries Service
- Maritime transportation: Federal Maritime Commission
- Mining and drilling: Bureau of Safety and Environmental Enforcement
- Nuclear energy: US Nuclear Regulatory Commission (NRC)
On a state and local level, the process is different for each jurisdiction. Generally speaking, you’ll need to gather your business and personal information, fill out required forms, and pay associated fees.
What you need to get a business license
While the federal government only requires a business license in certain cases, all businesses and business types can get a federal tax ID, or employer identification number (EIN), for free online at IRS.gov.
To get your state business license, you generally need the following:
- Owner name and contact information
- Business name and contact information
- Any required permits
- Any required forms or paperwork
- Associated fees (outlined below)
Each state has its own process and requirements for business licenses, which vary greatly. It’s always best to check directly with your local jurisdictions to determine what you need to get your business license.
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Types of business licenses
In order to sell services or products in your state, you might need to get a business license. The license type depends on your jurisdiction and your industry. License types include:
- Federal licenses: These are required for businesses engaged in activities regulated by federal agencies, including sectors like aviation, broadcasting, and alcohol manufacturing, where compliance with national regulations is necessary.
- Industry license: Industry-specific licenses are tailored to the unique requirements of certain sectors. For example, health care professionals, contractors, and financial institutions often need industry licenses to ensure they meet the specialized standards and regulations governing their respective fields.
- Business operating license: These are typically issued by local municipalities, ensuring businesses adhere to local regulations regarding zoning, safety, and other general operational considerations.
- DBA (doing business as) registration: A DBA, also known as a trade name or fictitious business name, is required when a business operates under a name different from its legal business name.
- Seller’s permit: Also known as a sales tax permit, this is essential for businesses in retail or wholesale. It allows businesses to collect sales tax on taxable goods and services and ensures compliance with state and local tax regulations.
- Special permits: Special permits are often required for specific activities or situations. For example, businesses organizing events, serving alcohol, or engaging in other regulated activities may need special permits to operate legally.
How to get a business license
- Form your business identity
- File for an employer identification number (EIN)
- Acquire a federal business license or permit
- Acquire state and municipal licenses
To obtain a business license, you’ll need to register with several local, state, and federal regulatory agencies.
1. Form your business identity
The first step is to officially create your business identity. This may involve business registration and forming an LLC or S corp—unless you decide to operate as a sole proprietor. Choose a legal structure that aligns with your business goals.
Your chosen structure determines how your business is taxed, your level of personal liability, and other legal considerations. Establishing a clear business identity from the outset provides a solid foundation for regulatory compliance and clear operations.
2. File for an employer identification number (EIN)
Next, you’ll want to file for your EIN to make the process easier. To apply for an EIN, you’ll typically need basic information about your business, such as its legal structure, the nature of its activities, and your personal details. Obtaining an EIN is a prerequisite for various licensing procedures and simplifies tax reporting and other administrative tasks.
3. Acquire a federal business license or permit
Businesses operating in certain industries must acquire a federal license. Businesses in qualifying industries need to contact a corresponding federal agency. Here are industries and agencies:
4. Acquire state and municipal licenses
Once you have any federal licensing squared away, check with corresponding government agencies at the state and local level to inquire about licensing. While each location has its own requirements, the process generally involves gathering your personal and business information, paying any fees, filling out any forms, acquiring permits, and submitting it all to the necessary parties.
How much does a business license cost in each state?
If you require a federal business license, fees vary by industry and are paid to the issuing federal agency. State license and permit fees can range from free to as much as $5,000. Costs vary by state and business activity.
Alabama requires two separate business licenses, each of which are non-refundable (except in the case of duplicates):
The business privilege license must be renewed annually by October 31, or businesses will pay a 15% tax penalty plus interest.
A business license in Alaska is $50 a year for new and renewal licenses. Licenses expire on December 31 each year, except in the case of licenses issued after October 1. A license issued after October 1 will be valid for the remainder of the year, as well as the following calendar year.
Alaska offers a senior discount and a disabled veterans discount. Qualifying businesses pay $25 instead of $50.
In Arizona, sellers must get a transaction privilege tax (TPT) and business license through the state’s License Compliance Program. TPT license fees vary per location jurisdiction, ranging from $1 to $50 annually.
In Arkansas, fees range from $50 to more than $1,000 per year, depending on the type of business.
California doesn’t require all businesses to have a license at the state level, but certain counties and cities do. Some industries are state regulated and require a license from a corresponding board or division. Check the CalGold permit assistance tool to find specific license requirements and fees.
Only certain businesses in Colorado require a license—the cost of a license for state-regulated businesses varies by industry. There may be additional license requirements depending on where the business is located, so check with your local municipality.
A business license in Aurora, for instance, is valid for two years and costs $26, plus a $17 application fee. In Fort Collins, any entrepreneurial or home-based business must also register as a home business, which costs $25 and is valid for two years.
In Connecticut, fees are based on the type of business. Charitable solicitations, for example, don’t need to pay an initial licensing fee. Other types of businesses do—fees range from $10 to $5,000.
In Delaware, a business license costs $75 for the first year. A 75% discount is available to business owners who are 65 years of age or older and meet other eligibility requirements.
Business startup costs for Florida merchants range from $87.50 to just over $1,000, depending on your business type. Florida doesn’t have the same business licensing requirements and processes as many other states, but it does require a seller’s permit or sales-and-use tax permit.
Georgia charges a non-refundable “investigation fee” of $100. Additional license fees apply to certain types of businesses. Breweries, distilleries, and wineries, for example, need to pay an additional $1,000. Retailers and wholesalers may also be required to pay additional fees, ranging from $50 to $1,000.
Hawaii requires merchants to get a general excise tax (GET) license to operate their businesses. This license has a one-time $20 fee.
Most Idaho businesses do not need to obtain business licenses, though some municipalities have their own licensing requirements. For certain industries, Idaho offers a Business Wizard with information on how to get a business license.
Illinois doesn’t issue a general state business license, but certain regulated professions do require a professional license for operation. There may be a local city or county license requirement, depending on the location of business.
In Chicago, additional fees for specific industries may also apply. Pop-up shops, for example, pay $25 for five days, $50 for 50 days, and other tiered pricing, up to $125 for a year. Businesses can check with their local municipality or Small Business Development Center for more information.
Indiana doesn’t require business licensing or registration.
Iowa business license requirements vary based on whether the business is regulated by an Iowa authority or licensing board. Most retail businesses need a sales tax permit. Registering a trade name in Iowa usually costs less than $10. Businesses should check with their Regional Small Business Development Centers for additional assistance and information.
Kansas-based businesses don’t need to pay a general business license fee to the state. Instead, licensing and fees are handled at the county and city levels.
Kentucky doesn’t have a statewide business license requirement. Certain types of businesses may need one or more special permits or licenses.
Louisiana also doesn’t have a statewide business license requirement. However, many cities have their own licensing requirements and fees. New Orleans, for example, bases fees on the gross sales of particular types of businesses.
General business licenses and permits are managed at the municipal level in Maine. In Portland, there’s a $45 business license application fee, and renewals cost $35 for the year. You can go to the licensing center on Maine’s Business Answers website for requirements and fees for each city.
Maryland doesn’t require a general business license. However, there are licensing and permit requirements depending on the type of business.
If you use a warehouse to store inventory, for example, a storage warehouse license will cost $30 to $150 each year, depending on the population size of the local municipality. A chain store license also has fees: $5 for each store for two to five stores; $20 for each store for six to 10 stores; $100 for each store for 11 to 20 stores; or $150 for each store for more than 20 stores (in all counties except Cecil and Baltimore City).
Business licensing in Michigan is heavily based on the type of business. Licensing fees vary widely.
Minnesota charges an initial filing fee ranging from $30 to $200 if done by mail ($50 to $220 if done in person or online). There’s no annual renewal fee. Some cities and counties may have additional licenses and fees.
Mississippi has a $50 initial filing fee, plus a $25 annual report fee. However, there’s no official state-issued business license.
Business license fees in Missouri are based on the amount of authorized capital a business has. Costs range from $58 to $143.
The state of Montana doesn’t require a general license, although some industries must file for a license with the Department of Revenue. Most cities and counties have their own rules regarding business licenses.
Bozeman, for example, requires all businesses to be licensed, and the application fee is $25 ($150 for medical marijuana businesses). Business owners can check with their local county for specific licensing requirements.
There isn’t a general license requirement in Nebraska, but certain businesses may have to file a license with the state. Certain cities require their own license, so business owners should reach out to their local government for specific local requirements.
Nevada requires all businesses to have a State Business License that must be renewed annually. The renewal fee is $500 for corporations and $200 for all other business types. The fee and form are due on the last day of the anniversary month that the business license was originally filed, or you’ll owe a $100 late fee. Additionally, Nevada requires businesses to obtain a local license with the city or county in which they operate.
New Hampshire doesn’t require businesses to have a general business license to operate. However, license requirements vary based on industry type.
All businesses must register for a business license in New Jersey. For-profit businesses and foreign non-profit corporations have to pay $125, while domestic non-profit corporations owe a discounted fee of $75.
New Mexico doesn’t have statewide business license stipulations. However, licensing may vary by city.
While businesses don’t have to pay for a state license with New York, many have to get a license at the local level. In New York City, you must file a Business Certificate (also called a Certificate of Assumed Name) form at the county clerk’s office, with fees ranging from $100 to $150.
In North Carolina, it costs $125 to file the Articles of Incorporation and $30 to reserve a corporate name. Other fees may also apply.
North Dakota doesn’t issue state business licenses. However, some businesses may need to register based on their industry, with fees ranging from $0 to $5,000.
Ohio doesn’t have general business license requirements but it does require any person or business who is making retail sales with “tangible personal property or taxable services” to register for a vendor’s license, which costs $25. Additional licenses and fees may also apply.
Oklahoma doesn’t require a state-issued business license. There are additional licensing requirements for some industries.
Like Oklahoma, there’s no state business license in Oregon, though some industries need to abide by additional parameters. Some cities and counties also require a license.
Businesses in Pennsylvania must pay $125 to file their Articles of Incorporation with the state. There’s also a $70 annual report fee.
Initial filing fees in Rhode Island range from $150 to $230, depending on the business structure. There’s also an annual $50 report fee ($60 for benefit corporations) and an annual $400 tax fee.
South Carolina doesn’t have a statewide business license. Licenses, permits, and regulations are all administered at the local level.
South Dakota doesn’t have a general business license fee, however, some businesses will need registrations/permits based on industry.
In Texas, businesses have to register to pay tax. All new businesses must register and pay a $15 fee. In-state businesses need either a minimal activity license (if you gross more than $3,000 but less than $10,000) or a standard business license (if you gross more than $10,000).
Texas doesn’t have any general business licensing requirements or fees.
Utah charges $54 for domestic corporation articles of incorporation and $18 for annual filings. It also requires all businesses to obtain a license from their local municipality, each with its own requirements.
Vermont charges a one-time fee of $125 for filing articles of incorporation. Businesses also pay an annual report fee of $45.
West Virginia doesn’t have a general business license. Terms and requirements vary by business entity.
Wisconsin doesn’t require a statewide business license. You’ll need to register with the state to ensure you’re properly collecting and paying sales tax. This costs $20 for two years, and an annual $10 fee thereafter.
Wyoming doesn’t have a state-issued business license but requires businesses to pay an annual $25 registration fee. Filing articles of incorporation costs $100.
Make your business legitimate
Registering your business and getting the necessary licenses and permits is imperative to long-term success. Once you have those steps out of the way, you can get back to the fun parts of launching and growing your business.
This post is for information only. Requirements are updated frequently and you should make sure to do your own research and reach out to a qualified legal and tax adviser, if needed. Businesses outside of the United States will have different steps and requirements.
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How to get a business license FAQ
How long does it take to get a business license?
It can take anywhere from one business day to several months to get a business license, depending on your industry and location. More complex licensing and heavily regulated industries have longer wait times.
Who needs a business license?
Not every business needs a business license. Businesses in regulated industries like food and beverage, CBD, health and wellness, or personal services often need extra business licenses and permits.
How do you get a retail business license?
You can get a retail business license by following the steps: Form your business identity. File for an employer identification number (EIN). Acquire a federal business license or permit. Acquire state and municipal licenses. The process is different for each type of business and geographic location.
How hard is it to get a business license?
It is not hard to get a business license. You simply need your business information, required paperwork and applications, and necessary fees. The process varies depending on location, industry, and licensing agency.