To get a business license in the United States, identify your business type and location, determine the required city, state, or federal licenses, and apply through the proper government authority with the necessary documents and fees.
Most businesses must have at least a local license to operate legally. In this article, I am going to discuss how to get a business license step by step, even if you’re totally new to the business world.
This will help you understand learn how zoning and location affect approval, what online and home-based businesses need, when a federal license is required, typical costs, approval timelines, and penalties for operating without a license.
By the end, you’ll know which licenses apply to your business and how to complete the process correctly.
What is a Business License?
A business license is a government-issued authorization that allows an individual or company to legally operate a business within a specific jurisdiction in the United States. It confirms that the business complies with local, state, or federal regulations related to safety, zoning, taxation, and industry standards.
A business license is not the same as forming a business entity. For example, registering an LLC or corporation creates a legal structure, while a business license grants permission to operate that business in a particular location.
The purpose of a business license includes:
- Allowing governments to regulate business activity
- Ensuring compliance with zoning, health, and safety laws
- Enabling proper tax collection
- Protecting consumers and public welfare
Most businesses in the US require at least one license, even small or home-based operations.
Does Your Company Need a Business License?
In most cases, yes. Companies need a business license to operate legally and comply with the security and tax guidelines of the government. Having relevant permits is necessary for the following types of businesses:
- Healthcare
- Professional services like lawyers
- Retailers
- Restaurants
- Childcare
- Education Centers
However, some businesses can work without requiring any permit. Online tutoring is an example of it.
How to Get a Business License?
There are a few steps that you need to follow in order to get a business license. Here are the details of these steps.
1. Establish a Structure:
If you have just started the business, it’s necessary to establish its structure before applying for a permit. Establishing the structure means identifying what type of business model your company has.
Establishing this structure helps with better legal organization of the company. Some main models that different people utilize include:
- Sole Proprietorship: Used by solo business runners.
- Partnership: Consists of multiple company owners.
- Corporation: Establishes the company as a separate business entity from its shareholders. It offers companies limited liability protection.
- LLC: A combination of a sole proprietorship and a corporation. It has limited liability protection as well. It is essential to review your state’s regulations because its formation and compliance requirements can vary by state. For example, if you are forming an LLC in New York, it is compulsory to publish a notice of formation in two newspapers for six consecutive weeks, which can add to the initial startup costs.
2. Brand Name Registration:
In most states, licenses are issued in the name of the company’s brand. So, it’s important to register one before continuing the process.
Brand name registration helps with trademarking a name so that no one else is able to claim it. Whatever name you choose, make sure to register it on your state’s business registration portal.
3. Get An Employer Identification Number:
Several states require an Employer Identification Number (EIN) in order to issue any type of company permit. This is a unique number that works like a Social Security Number. The government is able to easily track and identify the company with the help of this number.
Here’s a general process of getting an EIN for your company:
- Open the official website of the Internal Revenue Service.
- Scroll down and click “Apply for an EIN”.
- Click on “Begin Application”.
- Complete the application and provide all the required information.
- You’ll get the number when the information has been verified.
💡<strong>Important Note:</strong>
Sole Proprietorship owners can use their Social Security Number instead of an EIN for getting licenses, especially if they don’t have any employees.
4. Understand The Required Licenses:
Licenses aren’t the same for all businesses. Each company needs different types of permits in order to function properly. So, it’s important for you to determine what types of businesses your business is going to need.
Some major types of Licenses are discussed below, and you can see which one of them is suitable for your company:
- Federal licenses: For companies regulated by federal agencies.
- Industry licenses: For industries like healthcare and finance.
- Business operating license: For small businesses to stay compliant with local zoning and safety regulations.
- DBA registration: For businesses whose name differs from the registered name.
- Seller’s permit: For companies that need to collect sales tax.
- Special permits: These are other licenses required by specific companies in specific scenarios.
5. Apply For The License:
Now, it’s time to apply for the license. The application process for each license is different. The required documents and information vary as well. For example, you can get a general business permit from an authorized agency of your local state.
On the other hand, you’ll have to go through a more complicated process to get a specific permit, such as for managing a medical business.
So, the best thing to do is to do some research and follow the complete application process to get a permit. Another thing that you can do here is to contact a business consultant. These professionals know the ins and outs of the business world and help you walk through the whole application process easily.
6. Getting a Federal License:
There are some specific industries where companies need to acquire a proper federal license. It’s a special type of permit that is issued by a federal agency to regulate business activities of the relevant industry. After securing your business license, you can focus on scaling your operations effectively by exploring proven business growth strategies.
The table below can help you identify which agency to contact for a permit based on your industry type:
| Industry | Agency |
|---|---|
| Transportation & logistics | DOT |
| Agriculture | US Department of Agriculture |
| Aviation | FAA |
| Firearms and ammunition | ATF |
| Fish and Wildlife | US Fish and Wildlife Service |
| Commercial fisheries | NOAA Fisheries |
| Maritie Transportation | Federal Maritime Commission |
| Radio and television broadcast | FCC |
| Mining and drilling | Bureau of Safety and Environmental Enforcement |
| Nuclear energy | US NRC |
7. License Renewal:
In most cases, business permits aren’t permanent. They’re issued for a specific time period and need renewal after that. The renewal process also varies according to the nature of the permit.
However, the authorities provide clear guidelines about it. So, there’s nothing to get confused about. Just make sure you renew the permit before the deadline in order to avoid any severe consequences.
Final Thoughts: Your Next Steps for Getting Licensed
Knowing how to get a business license is extremely important for aspiring entrepreneurs. Even if you’re new to the business world, putting some effort into acquiring relevant permits will help in the long run. There are different types of permits that are suitable for different industries.
Simply decide which license your company needs and then apply for it according to the rules and guidelines. Before that, make sure to establish a business structure, register a company name, and get an EIN. These things are important for completing the application procedures.
People Also Ask
The exact amount of money required to get a business permit depends on the industry. However, most small businesses need around $50 to $150 in order to get any type of permit.
Yes, non-US citizens can also get permits for their companies. They may need to follow some specific guidelines in order to do that.
A general business permit is the best pick for small companies. It lets you legally operate within a local area. Some companies may also need other licenses, such as a seller’s permit.
Getting a business license in California is the same as in any other state. You simply need to establish a business entity and then apply for an EIN. Then, pick the license required by the company and apply for it. However, it is important to check for any special guidelines that is applied in the state of California for getting a permit.
About Author
Fawad Malik is a digital marketing professional with 15+ years of industry experience and the CEO of WebTech Solutions. He shares insights on how advanced technology helps individuals, brands, and businesses grow and succeed in today’s competitive digital landscape. He continues this mission by delivering valuable content on WiseToast.
