When you register your business, you typically file Articles of Organization or Articles of Incorporation with your Secretary of State. This allows you to legally incorporate your business or form an LLC. However, it doesn’t have anything to do with obtaining the licenses and permits you may need to operate a business within your industry. Most small businesses need a combination of licenses and permits from federal, state, and local agencies. The requirements and fees vary by business activities, location, and government rules.

 

Below, we discuss what licenses and permits are needed to start a business.

What is a business license?

When you start a business, there are a lot of tasks to take care of. Obtaining proper licensing is one of those tasks. While there’s an array of permits and licenses that apply only to specific industries, most businesses also require some sort of license. Licenses may be issued at the federal, state, or local level.

If you offer a professional service, they might be one of many licenses and permits you need to obtain. Some states and municipalities require you to have a general business license simply to operate. You may also need additional licenses and permits for specific business activities.

Unfortunately, there isn’t a way to check which licenses and permits you need without doing some research. You should set aside time to research the requirements for your industry, as well as your location.

Business Licenses vs. Business Registration

There’s a common misconception that if you’ve registered your business, you’re licensed to transact any and all business. It’s important to note that this is not the case. When you register your business and apply for an Australian Business Number (ABN), you typically inform the Federal Government of who you are, business address, type of industry you will be operating in, etc. However, it doesn’t have anything to do with obtaining the licenses and permits you may need to operate a business within your industry.

Licensing at the Federal Level

Some industries require federal licensing to conduct business activities. The particular requirements to obtain federal licenses and permits vary depending on the industry and the issuing agency.

Licensing at the State Level

On top of obtaining federal licenses, you might also need to obtain licenses from your state, depending on the activities you’re conducting. While the rules are different in each state, you might need a license to conduct the following business activities:

• Auctions
• Construction
• Dry cleaning
• Farming
• Food service
• Retail sales
• Hospitality (hotels, motels, etc.)
• Vending machines

Some state websites offer a search engine that helps you determine what types of licenses and permits your company will need. However, these lists don’t always include details about federal or local licenses. Therefore, it’s important to make sure you cross-reference any recommendations with information obtained from the Small Business Administration, your local council, and your state office.

It’s important to keep in mind that while your business may be licensed by the state, you might still need additional licenses from your local council or state government. Make sure to conduct thorough research to determine what combination of licenses you might need in your specific location.

Licensing at the Local Level

Many counties and municipalities require you to obtain a local business license. Depending on your location and its specific laws, this license might be needed even if your company is licensed at the state or federal level. You might need a general business license from your regional office, as well as permits that are specific to your business activities.

To determine exactly what you require at the local level, try searching the following websites:

• Your county and city offices
• The county clerk’s office
• Your state tax office

Professional Licenses

Professional licenses are issued by agencies that govern providers of professional services. If you or any of your employees offer regulated services, chances are good that your business or its employees need to obtain professional licensing.

As mentioned earlier, the above list is not exhaustive. If you provide any professional services whatsoever, be sure to investigate licensing requirements by contacting the agency that regulates your profession.

Other Types of Business Licenses and Permits

In addition to general and professional licenses and permits, your business might also require a variety of other permits, such as:

• Zoning permits
• Health permits
• Environmental permits
• Building permits

Which of these permits you need will depend on where you run your business, as well as the products or services you provide. It’s best to check with your city or county office to determine which of these permits might be needed.

Special Permits for Home-Based Businesses

If your business office is located in your home, you could be subject to an array of license and permit requirements. Depending on the regulations in your city and county, that might include:

• Home occupation permit
• Zoning permit
• Fire permit
• Sign permit
• Special use permit

Maintaining Your Licensing

Most licenses and permits require regular renewals. Depending on which licenses your business has, that might mean that you’re subject to periodic renewal fees. You may also need to re-submit applications after a certain period of time has lapsed or provide annual reports to your governing agency. Be sure to take note of the requirements of each license and permit you possess.

Conclusion

When you’re ready to obtain the correct licenses and permits for your business, try our business license report. Our partners use the data you provide, including your business location, industry, and activities, to identify potential licensing requirements. These partners search federal, state, and local regulations to help ensure that you’ve got all the information you need to get started.

Licenses and Permits FAQ

1. Do all businesses need a license?

Although many businesses require some licenses or permits to operate legally, there are circumstances in which a license isn’t required. This will depend largely on factors like your industry and location. Some states and local goverments do require a general business license to conduct any business at all within their borders.

1. Can you sell things without a license?

In many cases, your business will require a variety of permits and licenses in order to sell products. The exact licenses you need depend on what you’re selling, so it’s best to conduct thorough research prior to engaging in any business transactions.

1. Is it legal to run a business from home?

Running a business out of your home is sometimes legal provided you apply for the proper licenses and permits. Requirements vary by location, and further information can typically be obtained by your city or county’s licensing office.

1. What kind of license do I need for an online business?

Licensing requirements for online businesses are often the same as those for physical businesses. However, some permits required by physical businesses, such as zoning and building permits, don’t always apply to online businesses.

1. Do I need a license to sell on Amazon or Shopify?

Some states may require you to hold a seller’s permit if you want to earn money selling products online using Amazon, Shopify, Etsy, or other platforms. It’s best to research the specific requirements in your state by visiting the website for your state’s tax or revenue department.