What is a Business License

Written by: Mary Gerardine

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What is a Business License

A business license grants you the right to conduct business in a certain jurisdiction, and ensures that your business complies with the laws and regulations of the area in which you operate.

Different types of businesses may need multiple licenses from different authorities at the local, state, and federal levels, depending on their exact location and niche.

Read on to find out whether you need a business license, as well as the steps and requirements of obtaining one.

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Do I Need a Business License

Whether you need a business license or not will depend on several factors, such as your type of business, industry, and location.

  • Business Type: Your business type refers to the category or sector your business operates in, such as retail, technology, or manufacturing, and defines your business activities. For example, if you’re a retailer or wholesaler, you will require a business license to operate and may need a sales tax license or seller’s permit. If you’re a service-oriented business, like a food and beverage establishment, you may possibly need multiple licenses, including business, health, and liquor licenses. Moreover, even if you run a business from home, you might still need a business license, depending on the nature of the business and local regulations
  • Professional Services: Some types of business are more regulated than others and may require special licenses or certifications from professional boards. For example, if your business provides accounting, legal, medical, insurance, or real estate services, you may need to obtain a license from the state board that oversees your profession. Some industries are also regulated by federal agencies. In another example, if your business operates an oversized or overweight vehicle, you may need to get a federal license from the US Department of Transportation
  • Location: The location of your business also determines what kind of licenses and permits you need to operate legally. States have different requirements and fees for issuing licenses and permits. For instance, a business operating in California might need a different license than one in Texas. Many cities or counties have their own licensing requirements as well, meaning that even if a state doesn’t require a general business license, your city or county might require one

Check out the list below to find out whether a general business license is required in your state.

StateGeneral Business License RequirementLicensing Requirements
AlabamaYesAlabama’s license is called a Business Privilege License and is required for every business in the state. It’s provided by the probate judge or license commissioner in your county office.
AlaskaYesAlaska’s general business operating license is required for all business entities operating in the state.
ArizonaNoArizona does not require or provide a standard business operating license. You can reach out to your local city or county office to identify the necessary local permits.
ArkansasNo Arkansas doesn’t provide a business operating license at the state level. However, you might need to obtain a local business license from your city or county clerk’s office. 
CaliforniaNo California doesn’t grant a business operating license at the state level. Instead, you’ll need a local business license from your city clerk’s office.
ColoradoNo Colorado doesn’t mandate a statewide business operating license. However, your city or county might necessitate local licenses and permits, available at the city or county clerk’s office.
ConnecticutNo Connecticut doesn’t issue a general business license at the state level. However, local licenses and permits might be necessary depending on your city or county. 
DelawareYesDelaware’s general business license is available through the state’s business portal, One Stop.
FloridaNoBusinesses providing services need specific state licenses. Also, many counties in Florida, along with some cities, require a business license, often referred to as a business tax receipt. Consult your city and county’s tax collection department to understand your obligations.
GeorgiaNoGeorgia doesn’t impose a business operating license at the state level. However, the majority of cities and counties mandate a local license.
HawaiiYesEvery business in Hawaii needs the General Excise Tax License, available through the Department of Taxation.
IdahoNo Idaho’s State & Federal Resources for Business provides a business wizard tool to assist you in identifying the necessary licenses and permits for your business.
IllinoisNoIllinois doesn’t provide a general business license. However, certain cities or counties within the state may necessitate a local license.
IndianaNoIndiana doesn’t have a statewide business license. Your city or county may require local licenses and permits, though.
IowaNoThere is no state-level business operating license in Iowa. However, you may need to obtain local licenses from your city or county. You can apply for them at the office of the city or county clerk.
KansasNo You don’t need a state-level business operating license in Kansas. But you may have to get local licenses from your city or county. You can find them at KSbiz.kansas.gov
KentuckyNoKentucky doesn’t provide a general business license. You can contact the local government agencies where your business is located, and in any cities or counties you intend to operate in to find out if there are any local licenses needed for your business.
LouisianaNo Check out Louisiana’s geauxBIZ, which is a one-stop site for new business owners. It helps you create a checklist of the state licenses and permits you need and gives you other resources. You should also check with your city and county to see if you need any local business licenses.
MaineNoYou don’t need a state-level business operating license in Maine. However, some local governments in Maine may ask you to get a local business license.
MarylandNoThere is no state-level business operating license in Maryland. But you may need other statewide licenses or permits for your business. You can use the business licensing portal to find out what you need. You may also have to get local business licenses from some localities. You can contact your local clerk of court to learn more about the local requirements.
MassachusettsNoMassachusetts doesn’t give out a statewide business license. However, some cities or counties might require you to have one.
MichiganNo Michigan does not have a statewide business license. However, some cities and industries may require specific licenses or permits. You should check the local and state regulations for your business type and location.
MinnesotaNoMinnesota does not have a statewide business license. However, some cities and industries may require specific licenses or permits to operate. You can use the Minnesota ELicensing portal to access licensing information.
MississippiNoMississippi does not require a general business license at the state level. However, some cities and industries may require specific licenses or permits to operate legally. 
MissouriNo There’s no state-level business operating license in Missouri. However, you may need to obtain local licenses from your city or county.
MontanaNoMontana does not have a statewide business license. But, some cities and counties may require specific licenses or permits for certain types of businesses.
NebraskaNoA general business license is not required or issued by Nebraska. However, you need to get local licenses from the city where your business is located. You can contact Nebraska’s Business Licensing office for more information.
NevadaYesThe State Business License for Nevada is provided and regulated by the Secretary of State. It can be obtained and renewed through the state’s online business portal, SilverFlume.
New HampshireNoNew Hampshire does not have a statewide general business license. Since there’s no state sales tax, there’s no New Hampshire seller’s permit. However, businesses in certain professions are required to have specific licenses or permits. You should check the local and state regulations for your business type and location.
New JerseyNoThere’s no general business operating license in New Jersey. However, some business activities require a state license. You should also register your business with the clerk’s office of your county and city, if applicable.
New MexicoNoNew Mexico doesn’t offer a general business license. However, you may need to obtain a license for specific industries or business activities from the New Mexico Regulation and Licensing Department. You should also check the local business license requirements of your city and county.
New YorkNoNew York doesn’t require a general business license. However, you may need to obtain other licenses and permits depending on your business type and location. You can use the Business Wizard to find out what you need. You should also contact your city and county to see if you need a local business license. In New York City, you can create a customized list of licensing requirements online.
North CarolinaNoThere’s no statewide business license in North Carolina. However, many cities require a local license. You should contact your city to find out what you need.
North DakotaNoNorth Dakota doesn’t require a business license statewide, but cities and counties might require one depending on your business type. 
OhioNoOhio doesn’t have a general business license requirement. However, some industries require a state license. You should check the state regulations for your business type.
OklahomaNoOklahoma doesn’t issue a state-level business license, but some industries require a state license. You should also check the local licensing requirements of your town, county, or city.
OregonNoThere’s no statewide business operating license in Oregon. However, you may need to obtain trade licenses and local business licenses depending on your business type and location. You can use the Oregon Business Xpress website to find out what you need.
PennsylvaniaNoYou don’t need a general business operating license in Pennsylvania. However, your city or county may require local licenses. You can contact the city or county clerk’s office to learn more.
Rhode IslandNoThere’s no business operating license in Rhode Island. However, your city or county may require local licenses. You should contact your local authorities to find out what you need.
South CarolinaNoMost cities in South Carolina require a local business license. You should visit South Carolina’s Business One Stop to figure out what you need.
South DakotaNoThere’s no general business license requirement in South Dakota, but in some industries, you might need to get one. You should check the state regulations for your business type.
TennesseeYesA business must obtain a Standard Business License in Tennessee if its annual sales exceed $3,000.
TexasNoTexas doesn’t need a state business license, but your city or county might require one. Check with the City Hall’s Business License office.
UtahNoIn Utah, get the licenses you need from the city or county where you conduct business. The Utah Department of Commerce has a guide with local licensing offices.
VermontNoVermont doesn’t mandate a state business license. However, your city might require one so it’s best to contact your city clerk’s office.
VirginiaNoVirginia doesn’t have a state business license. But most cities or counties want local business licenses.
WashingtonYesAll businesses need to obtain the state’s business license from the Business Licensing Service.
Washington D.C.YesBusinesses in Washington D.C. are required to obtain a Basic Business License from the Department of Licensing and Consumer Protection Business and Professional Licensing Administration Business Licensing Division. The Basic Business License is a category-based license that covers various types of businesses. 
West VirginiaNoWest Virginia does not have a statewide business license. However, many cities in the state require businesses to be licensed. The rules for business registration depend on the location and the type of business. You should check the local and state regulations for your business type and location.
WisconsinNoWisconsin doesn’t have a state business license. However, your city might require local licenses. Check with your city or county clerk’s office for more information.
WyomingNoWyoming does not have a statewide general business license. Instead, city business licenses and permits are dictated by your industry and profession, or by the location of your business.

Note: Getting a business license is not a one-size-fits-all process. You will need to do some research and planning to figure out what kind of licenses and permits you need for your specific type of business, location, and industry. You can also hire a business attorney for assistance (which is reliable but can be quite expensive).

Alternatively, many businesses opt to leverage the expertise of third-party services to handle the licensing process on their behalf.

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How to Get a Business License

Getting your business license is influenced by various factors, and the process to get licensed also varies. Below are the common steps to obtaining one.

Step 1: Form Your Business

Before pursuing a business license, it’s important to select the right business structure. While sole proprietorships, general partnerships, and corporations are common options, many believe that registering as an LLC offers the most benefits for small businesses.

To deal with the process of establishing an LLC, many small business owners turn to third-party services that specialize in LLC formation.

This is relatively cheap and affordable — especially in comparison to hiring a business attorney — and can save you a significant amount of time when starting out.

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Step 2: Obtain an EIN

The next step before applying for your business license is to get your Employer Identification Number (EIN). This unique nine-digit number is given by the Internal Revenue Service (IRS) to US businesses and is used to track financial activities.

You will need to obtain an EIN before applying for a variety of different licenses; this is because an EIN helps local, state, and federal authorities verify that your business is operating in a manner that is compliant with the law.

Keep in mind that you can apply for your EIN onlinethrough mail, or over the phone.

Note: If your business operates as a sole proprietorship and does not have employees, you will likely be able to use your Social Security Number (SSN) instead of your EIN when applying for your business licenses (if applicable).

Step 3: Apply for Licenses and Permits

Once you’ve chosen the right business structure and obtained your EIN, you will need to complete the following steps in order to obtain the required licenses and permits you will need to run your business legally: 

  • Local Licenses: These are general licenses that allow you to conduct business within a city or county. The cost and requirements vary by location, but you can usually apply online or in person at the local government office. You may need to provide information such as your business name, address, contact details, and EIN. Please note that the requirements between cities and counties are often different in terms of licenses and fees.
  • Statewide Licenses: If your business intends to sell products or services, many states require obtaining a seller’s permit through the state’s Department of Revenue or similar authority. If you’re a lawyer, accountant, doctor, plumber, electrician, or cosmetologist, you may need to obtain a professional or occupational license from the state board or commission that oversees your industry. 
  • Federal Licenses: The federal government doesn’t usually require licenses for standard business activities. However, if your business is in a sector like agriculture, fishing, firearms, or alcohol sales you might need federal licenses or permits on top of your local and state licenses

Note: You can also use the SBA’s Business License and Permit Tool to find out what licenses and permits you may need for your specific business type and location. Alternatively, you can have a look at our state-specific How to Get a Business License guide.

Step 4: Renewal of Licenses and Permits

The renewal of business licenses and permits is a process that varies depending on the type, level, and location of your license or permit. Some licenses and permits expire after a set period of time, such as one or two years.

You should keep track of when you need to renew your licenses, as well as how long before the expiration date you will be able to apply for renewal. This is because even though most local, state, and federal agencies will send you a reminder notice, it will be your responsibility to renew on time and avoid potential penalties and/or fines.

Keep in mind that the requirements and fees for renewing your license or permit may differ from the initial application process. You may need to provide updated information, documents, or proof of compliance with local, state, and federal regulations.

You may also need to pay a renewal fee, which may be equal to or different from the initial fee. You can find out the specific requirements and fees by contacting the issuing agency or visiting their website.

What is a Business License FAQ

What’s another name for a business license?

A business license may be referred to as a “business permit,” “operating license,” “trade license,” or “commercial permit.” It’s an official document or certificate that allows a business to operate within a specific jurisdiction. For a brief overview of business licenses, read our What is a Business License article.

How can I get a business license?

To get a business license, you can check local, state, and federal government websites or offices for requirements. You must fill out the necessary application, obtain an EIN (SSN if you’re a sole proprietor), and pay the fee. Go to our How to Get a Business License for more information.

Do I need a business license?

Whether you need a business license depends on your location, business type, and industry. Most states, cities, or counties require licenses for businesses operating within their jurisdictions. You may also need a federal business license depending on your industry. It’s recommended to check if you need a license with local, state, and federal government offices and websites.

How much does a business license cost?

The cost of a business license depends on your business activity and location. Some states may charge as low as $10 (like Rhode Island), while others may require fees up to several thousand dollars (like Kansas). It’s best to check the offices or websites of the local, state, and federal authorities for exact figures.

For all related articles, have a look at our How to Get a Business License page.