How to Get a Business License, Permits and Register Your Company Properly in 2025

How to Get a Business License, Permits and Register Your Company Properly in 2025

How to Get a Business License, Permits and Register Your Company Properly in 2025

As a small business owner, you want to make sure you’re starting off on the right foot by running your new business in line with local laws and regulations. One way to do this may be to get a business license, but this depends on the nature of your business and the laws in your area. Business licensing requirements change from state to state and even from city to city.

Getting a business license or permit can add credibility to your business by legitimizing you both in the eyes of your local government and your customers. And it may be required by law.

Read on to find out more about why you should consider a business license and how to get one.

What is a Business License?

A business license is any government-issued license or permit that is required to do business activity in that locality. In the U.S., these are generally governed state to state and depend on the kind of business you have.  State license requirements are common, but keep in mind that your city or county may have specific business licensing requirements even if your state does not. There are several types of businesses that usually need a business license, regardless of location. It all depends on your business structure and where you’re located. 

A business license can do more than just keep you in line with local laws. It can also help you to limit your personal liability, gain access to funding, keep up with your taxes, and help you build trust with your customers. 

Who Needs a Business License?

Generally, entrepreneurs may need a business license for the following reasons:

  • You have a brick and mortar business. A business license will allow you not only to engage in commercial activity, but also to do work on the building. City laws may require you to have a business license for fire safety or to ensure you’re posting proper safety signs, too.
  • You sell goods. In this case, you’ll likely need a seller’s permit, which allows you to collect sales tax.
  • You’re a licensed professional. This includes medical providers, hair stylists, lawyers, accountants, childcare providers, and others. 
  • You sell highly regulated items or perform a regulated service. You’ll need a license to sell food, alcohol, tobacco, or firearms, as these are highly regulated by law. Services that are regulated by federal or state law will also require industry-specific licenses.

What are the Types of Business Licenses?

There are many different types of business licenses. Which ones do you need? It depends on what type of business you operate and where you do business.  and the kind you need will depend on what type of service you provide and where you do business. 

Here are a few common licenses or permits that business owners should consider:

  • General Business License –  Generally issued by a state Department of Revenue (DOR) or Secretary of State, a general business license or operating license is not required in most states. However, you may need one depending on your city or county regulations. 
  • Doing Business As (DBA) – Typically, your business name is your personal name if you own a sole proprietorship. If you’d like to do business under a different name than the one you’ve registered, you can get a “Doing Business As” (DBA) license. It acts as a sort of legal nickname for your company, which can help you rebrand without having to go through the time-consuming and expensive process of legally changing your business name. 
  • Permits – Depending on where you do business and what kind of business it is, you may need special permits, like zoning, home occupation, buildings, planning, signs or fire permits. These types of permits are most common for brick and mortar businesses.
  • Professional Licenses – Many service-based businesses, like law firms, accounting firms, therapists, salons, and even landscaping may require licenses to operate. These are regulated at the state and city level. 
  • Federal Permits and Licenses – You’ve heard of a liquor license being necessary for a bar, restaurant, or liquor store to run. This is because alcohol is regulated by the federal government. Other businesses that require federal licenses include firearms, TV and radio, and aviation industries. 

What Are the Steps to Get a Business License?

Although it may sound daunting, getting a business license can be straightforward if you’re prepared. You may want to enlist the help of a small business accountant to make sure you check all the boxes, but in general, following these steps will help you figure out what licenses you need and how to obtain them. 

1. Form your business entity

Business formation is the legal start of your business. There are several structures available, including a sole proprietorship, general partnership, limited liability company (LLC), corporation, or nonprofit corporation. Please note that choosing a business structure, such as an LLC, is not the same as applying for a business license or permit. 

2. Apply for an Employer Identification Number (EIN)

The employer identification number (EIN) or employee tax identification number is a nine-digit tax id number used by the IRS to identify your business, and allows you to file your business tax return. You can either apply for free using the SS-4 form through the IRS via their online portal, mail, or fax, or have your business accountant fill out the forms for you. 

3. Determine what licenses you need (if any)

Depending on your business location, these requirements can vary widely. Your local SBA office can be an excellent resource for this, but you can also visit your state’s Secretary of State website or Department of Revenue office. If you’ve hired a business lawyer or accountant, this is another opportunity for them to go to work for you. 

4. Apply for the licenses

 Business license applications can generally be completed online with your city, state, or federal agencies. And again, the SBA is an excellent resource for ensuring that you’re following the right processes for the licenses and permits you need to function as a business. 

5. Renew the license as needed

Just like your driver license, business licenses expire after a set amount of time. Keep on top of renewal dates to make sure your business continues functioning legally and remember that some government agencies may need a long lead time to renew licenses due to staff shortages or other issues. 

Why is a Business License Important?

Staying on top of your federal, state, and local licensing and permitting requirements can make your business much safer and more secure in the long run. It’s worthwhile to put in the work up front to ensure that you’re following local laws and regulations, not only to keep your business out of trouble with the law, but to increase your customers’ respect and trust. 

Just like good business credit scores help lenders feel more comfortable taking a risk on your business, a business license helps establish your company as reputable. Some lenders will require you to provide a copy of your business license in order to get a small business loan.

Business License vs Permit

At first glance, business licenses and permits might seem like the same thing – they both give you permission to do business. But they serve different purposes. A business license is your general permission to run a business in your area. Think of it like your driver’s license, but for running a business. You usually get it from your city or state government, and you’ll need to renew it regularly, just like your driver’s license.

Permits are more specific. They give you permission to do certain activities or offer specific services. For example, if you run a restaurant, you’ll need a health permit to serve food and maybe a separate permit to put tables outside. Some permits you’ll need to renew every year, while others might be one-time approvals for specific projects, like renovating your storefront.

Process to Register a Company vs Get a Business License

Many new business owners mix up registering a company and getting a business license, but they’re two different steps in starting your business. Registering your company is like giving your business its official birth certificate. You pick your business type (like an LLC or corporation), file paperwork with your state, and get documents that make your business official. You only need to do this once when you start your business.

Getting a business license is a separate step that gives you permission to actually operate your business. While registration tells the government what your business is, a license tells you what your business can do. For example, you might register your bakery as an LLC with your state first. Then you’d need to get licenses from your city to operate the bakery, from your state to sell food, and maybe more licenses if you want to cater events. Unlike registration, you’ll usually need to renew these licenses regularly to keep your business running legally.

FAQ

How much does a business license cost?

The cost of a business license will depend on many factors, especially the kind of business you’re running and where you’re running it. You can expect a general license to be as little as $15 or as much as several hundred dollars. If you’re selling something that is federally regulated, such as alcohol or tobacco, you can expect to pay even more. Once again, your local SBA is the best place to track down how much your business license will cost, and a business lawyer or accountant can help you make sure you’re filing everything properly. 

Can you run a small business without a license?

The answer to this question is yes — if you run a small business in a state that doesn’t require a license. For instance, Texas does not require a general business license. However, there are instances where you may need a permit or license to operate based on the kind of business you’re running and the county or municipality in which you’re planning to operate. Even in Texas, you need a liquor license to sell alcoholic beverages and you have to have a medical license to open a medical clinic.

Your local economic development office, Department of Revenue (DOR), Small Business Development Center (SBDC) or State Department of Corporations (or similar office) can often provide you with a list of necessary licenses and permits. Many states also have “business one stop” websites with the information you need to start and run a business in that state.

You can get a full list of federal license requirements and where to apply for them from the U.S. Small Business Administration (SBA).

Is an LLC a business license?

No. An LLC is a type of business structure, like a sole proprietorship or general partnership. While determining your business structure may help you decide which permits or licenses you need to run your business, the structure is not the same as a business license. 

Can you charge a business license on a credit card?

Yes, you can usually charge a business license to a personal or business credit card. But because you are paying a government agency, there may be a convenience fee charged.

How much does it cost to register a company in the USA?

The cost to register a business varies by state and business type. For an LLC, most states charge between $50 and $500 for registration. The cheapest states, like Kentucky and Mississippi, charge around $50, while states like Massachusetts and Texas charge closer to $500. If you’re registering as a corporation, fees typically run a bit higher, from $100 to $800 depending on your state.

Remember that registration is just one cost. You might also need to pay for things like an operating agreement, registered agent services, or help from a business formation service or lawyer. Many online services can help you form a business entity and register a business for around $100-300 plus state fees.

What license is best for a small business?

There’s no single “best” license for small businesses because every business has different needs. The licenses you need depend on what you do and where you operate. Most small businesses start with a general business license from their city or county. From there, you’ll need specific licenses based on your work.

For example, if you run a home-based consulting business, you might only need a general business license and home occupation permit. But if you’re opening a restaurant, you’ll need several licenses including a food service license, health permit, and maybe a liquor license. The best approach is to check with your local Small Business Administration (SBA) office to find out exactly what your business needs.

How to register an LLC in the USA?

Registering an LLC involves several states, including picking a unique business name and making sure it’s available in your state. You will need to choose a registered agent – this is the person or service that will receive legal papers for your business. Next, you’ll file your “Articles of Organization” with your state’s Secretary of State office. 

Once approved, create an operating agreement that explains how your LLC will run. Finally, get your EIN (Employer Identification Number) from the IRS – it’s like a Social Security number for your business. You can do all this yourself, use an online service, or work with a lawyer.

Read: How to Form an LLC

Do I need to register my business through my state?

Most businesses need to register with their state, but there are some exceptions. If you’re a sole proprietor using your legal name as your business name, you might not need to register. For example, if your name is Jane Smith and you’re doing freelance work as Jane Smith, you might be able to skip registration.

But if you’re forming an LLC, corporation, or using a different business name—also called a fictitious business name or Doing Business As (DBA)—you’ll need to register with your state. It’s also worth noting that even if you don’t need to register with the state, you might still need local business licenses or permits to operate legally. When in doubt, check with an attorney or your Secretary of State’s office.

This article was originally written on March 15, 2022 and updated on December 12, 2024.

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