What is a business license?
A business license is a legal document that states that you have the authorization to own and operate a business in a specific area. Business licenses are typically issued at the local, state and federal levels, depending on the type of company you run. To get a license, you may need to complete a registration process and, in certain situations, pass a professional exam.
What is a business permit?
A business permit is a legal document that verifies that your business complies with laws and regulations in your operating location. You might get permits to prove that you’re following local laws related to workplace safety, maintenance, food preparation, building systems and zoning restrictions, among others.
Permits are usually issued by your city, county or state government. Some permits require an inspection from the relevant government agency.
Your business may need multiple permits. If you plan to operate a restaurant, for example, you might need a health permit from the public health department, a food seller’s permit from the state and an outdoor seating permit from the city zoning department.
Some examples of licenses and permits
The specific licenses and permits your company needs may vary based on your business type and applicable local, state and federal regulations. Here are some examples of common business licenses and permits you might need for your business:
Business licenses
Some common business licenses include:
- Federal business license: Federal business licenses apply to businesses that are regulated by a government agency. For example, agricultural businesses that are regulated by the Food and Drug Administration or the U.S. Department of Agriculture might need a federal license.
- State business license: State licenses typically govern things like revenue registration. Not all states require this type of license.
- Local business license: Local licenses often dictate county-level zoning or gross receipts tax. Depending on where you’re located, you may need a license from the city, county or both.
- Doing business as (DBA) license: A DBA license allows your business to operate under a name other than its legal name, which is useful when expanding to a new product line or industry.
- Sales tax license: Sales tax licenses are required if your business sells products in a state with sales tax.
- Direct sales license: You might need a direct sales license if your company’s employees visit customers’ homes or workplaces to offer your services.
- Professional license: A professional license qualifies you to operate a particular business. It’s usually required if you work as a doctor, nurse, lawyer, electrician or general contractor.
Business permits
Common business permits include:
- Seller’s permit: A seller’s permit enables your business to purchase wholesale items and resell them to customers or other businesses.
- County permit: A county permit allows you to operate your business within a particular area.
- Fire department permit: A fire department permit verifies that your company’s facilities meet local fire safety standards. It’s typically issued by the fire department after your company passes an inspection. The inspector verifies compliance with local codes regarding flammable materials, fire-suppression systems, exit signs, exit routes and electrical safety.
- Health department permit: A health department permit might be required if your business sells food products. You might need this permit if you run a grocery store, food truck, convenience store or restaurant. To receive this permit, your company typically needs to pass an inspection evaluating pest protection, safe chemical storage, food storage, hygiene, cleaning practices and equipment maintenance.
- Pollution control permit: A pollution control permit states that your company’s operations comply with pollution regulations for activities such as burning chemicals, using paint or spray paint or using specific cleaning materials. It’s typically issued at the local level.
- Sign permit: A sign permit gives you permission to put up a sign or change an existing sign. It usually applies to exterior signs and is typically issued by your city government. To get a sign permit, ensure your sign’s size, language and placement align with local laws and regulations.
How do you get a business license?
The process for getting a business license varies by government agency. Here’s an overview of what to expect for federal, state and local licenses.
Federal business license:
- Visit the SBA’s licenses and permits page and look for your business activity under “Federal licenses and permits.”
- Follow the link to the agency that handles your license. That’s where you’ll find application forms, fees and filing instructions.
State and Local Licensing Process:
Start with your state’s licensing website to see what your business needs. Then check with your city or county. Even if you have a state license, you may still need local approvals, such as zoning or health permits.
When planning your business, check licensing timelines before setting an opening date. Some approvals take weeks or even months, especially when an inspection is required.
