Applying for a business license typically involves registering with your city or county, and depending on your industry, you may also need state and federal permits. There is no single “business license” in the United States. Instead, you’ll deal with up to three levels of government, each with its own applications, fees, and timelines. The good news is that most of the process can be done online, and a straightforward local business can often be licensed within a few weeks.
Figure Out Which Licenses You Actually Need
Before you fill out any forms, identify which layers of licensing apply to your business. Almost every business needs a local license or permit from the city or county where it operates. Many also need state-level registration, especially if they collect sales tax, hire employees, or work in a regulated profession. A smaller number need federal licenses.
Start by searching your city or county government website for “business license” or “business tax receipt.” Then check your state’s business portal, which most states maintain as a one-stop resource. The SBA’s website also links to state-specific licensing pages. Make a checklist of every permit mentioned for your type of business before you begin applying, because some licenses must be obtained before others. A health department permit, for example, often needs to be in place before your city will issue a general operating license.
Local Licenses and Permits
Your city or county government is usually the first stop. The most common local requirement is a general business license, sometimes called a business tax receipt. This is essentially permission to operate commercially within that jurisdiction, and it comes with an annual fee. Fees vary widely by location, from under $50 to several hundred dollars depending on the city and your type of business.
Beyond the general license, your local government may require additional permits based on what you do and where you do it:
- Zoning or certificate of use: Confirms your business activity is allowed at your specific address. A city’s zoning office checks that your location is designated for your type of use (commercial, industrial, home-based, etc.).
- Health department permit: Required for restaurants, food trucks, bars, and any business that handles food or beverages.
- Home occupation permit: If you run your business from your residence, many cities require a special permit and may impose rules on signage, customer visits, and parking.
- Sign permit: Needed if you plan to install exterior signage at your business location.
- Mobile business license: Required for food trucks, mobile vendors, and businesses that sell from a vehicle or temporary setup.
- Specialty permits: Depending on your city, these can include fire department permits, alarm system permits, or industry-specific approvals like oil and grease management certificates for restaurants.
Processing time for local licenses ranges from a few days for simple applications to several weeks if your business type triggers additional review, such as a zoning evaluation or fire inspection. Many cities now offer online application portals where you can submit forms and pay fees with a credit card.
State Licenses and Registration
At the state level, you may need two things: a general business registration and an occupational or professional license.
Most states require you to register your business entity (LLC, corporation, etc.) with the secretary of state’s office before you can operate. This is separate from a business license but is often a prerequisite for getting one. Filing fees for entity registration typically range from $50 to $500 depending on the state and entity type. You’ll need to provide your business name, registered agent information, organizer or incorporator names and addresses, and payment.
If your business collects sales tax or has employees, you’ll also need to register for state tax accounts. This usually requires your federal Employer Identification Number (EIN), your business address, an industry classification code, and estimated sales or payroll figures. States that have sales tax will issue a seller’s permit, and if you have employees, you’ll receive a withholding tax account number and will need to register for unemployment insurance.
Professional and Occupational Licenses
Dozens of occupations require a state-issued professional license before you can legally practice. According to the National Conference of State Legislatures, commonly licensed occupations include cosmetologists, barbers, electricians, plumbers, general contractors, real estate agents, massage therapists, insurance sales agents, private detectives, funeral directors, and many healthcare roles like registered nurses, dental hygienists, EMTs, and pharmacy technicians. Even manicurists, auctioneers, pest control applicators, and home inspectors are licensed in many states.
Professional licenses typically require completing an approved education or training program, passing an exam, and paying a licensing fee. The requirements and fees vary by state and occupation. If your business involves any of these fields, check with your state’s licensing board well in advance, because the process can take months.
Federal Licenses and Permits
Most small businesses do not need a federal license. Federal permits apply only when your business activity is directly regulated by a federal agency. Industries that require federal licensing include:
- Alcohol: Manufacturing, wholesaling, or importing alcoholic beverages (regulated by the Alcohol and Tobacco Tax and Trade Bureau)
- Firearms and explosives: Manufacturing, selling, or importing firearms or ammunition (Bureau of Alcohol, Tobacco, Firearms and Explosives)
- Agriculture: Importing or transporting animals, animal products, or plants across state lines (USDA)
- Aviation: Operating aircraft or transporting goods and people by air (FAA)
- Broadcasting: Radio, television, satellite, or cable broadcasting (FCC)
- Commercial fishing: Any commercial fishing activity (NOAA Fisheries)
- Mining and drilling: Extracting natural gas, oil, or minerals on federal lands
- Nuclear energy: Commercial nuclear energy production or handling nuclear materials
If your business falls outside these categories, you can skip the federal licensing step entirely. You will still need a federal EIN from the IRS, but that’s a free tax identification number, not a license. You can get one online at IRS.gov in about 15 minutes.
Documents to Gather Before You Apply
Having your paperwork ready before you start filling out applications will save you from stalling midway through. Most applications across all levels of government ask for some combination of the following:
- EIN or Social Security Number: Your federal tax ID, or your SSN if you’re a sole proprietor without employees
- Business entity documents: Articles of incorporation or organization if you’ve formed an LLC or corporation
- Business name: Your legal name and any trade name or “doing business as” (DBA) name
- Business address: The physical location where you’ll operate, plus a mailing address if different
- Owner information: Names, addresses, and sometimes Social Security Numbers for all owners or partners
- Lease agreement or proof of property ownership: Many local applications require evidence that you have a right to use the space
- Industry-specific documentation: Professional license numbers, food handler certifications, contractor bond information, or proof of insurance, depending on your business type
- Payment method: Credit card, debit card, or bank account information for electronic payment of fees
The Application Process Step by Step
Once you know which licenses you need and have your documents ready, the process follows a fairly predictable path.
First, get your federal EIN if you don’t already have one. Apply online through the IRS website. This is free and instant during business hours. You’ll need this number for nearly every other application.
Second, register your business entity with your state if you’re forming an LLC, corporation, or partnership. File your articles of organization or incorporation through your secretary of state’s office. Many states offer online filing with processing times ranging from same-day to a few weeks, with expedited options available for an additional fee.
Third, register for state tax accounts. If you’ll collect sales tax, you need a seller’s permit. If you’ll have employees, register for withholding tax and unemployment insurance. Your state’s revenue department or business portal handles these registrations, and there’s usually no fee.
Fourth, apply for your local business license. Visit your city or county’s website, find the business license application, and submit it along with any required supporting documents. Pay the application and license fees. If your business requires a zoning review, health inspection, or fire safety check, those will typically be triggered automatically by your application.
Fifth, apply for any professional or industry-specific licenses you identified in your research. These often have their own timelines and should be started early, especially if they involve exams or background checks.
Costs You Should Expect
Total licensing costs depend on your location, business type, and how many permits you need. A simple service business operating from home might spend under $200 total. A restaurant or construction company dealing with multiple permits, inspections, and professional licenses could spend $1,000 or more before opening.
Common cost components include a local business license fee (often $50 to $200 annually), state entity registration ($50 to $500 as a one-time filing fee), professional license application fees, and inspection fees if your business requires health or fire safety review. Most licenses also require annual renewal, so budget for those recurring costs as well.
Renewals and Ongoing Compliance
Getting your licenses is not a one-time task. Most business licenses expire annually and must be renewed, usually with a fee. Some professional licenses renew every one to three years and may require continuing education credits. State entity registrations often require an annual report or periodic information filing to keep your business in good standing.
Mark every renewal date on your calendar as soon as you receive a license. Several states and cities impose substantial late fees for missed deadlines, and in some cases, operating with an expired license can result in fines or forced closure. Some jurisdictions will administratively dissolve your business entity if you miss annual filing requirements.