How to Get a Business License

A crucial step in starting a business is acquiring all the required licenses and permits. Depending on your industry and location, you may need licenses and permits at the federal, state, and local levels. 

This is non-negotiable, as you could face major business hurdles and penalties without them. Lucky for you, this guide lays out all you need to know to ensure you’re in full compliance.

Which Department Issues Business Licenses and Permits?

In most states, several agencies and departments issue licenses and permits depending on the type of business. Sales tax permits, for instance, are usually issued by the taxation department. 

Again, various departments issue licenses and permits at the county and municipal levels. Check with your local governments for requirements. 

Federally, different departments oversee different industries. As a result, licenses and permits are generally industry-specific, except for health permits from the Occupational Safety and Health Administration (OSHA).  

If you run a farm, the U.S. Department of Agriculture may require licenses and permits for your business. In addition, you must register with the Bureau of Alcohol, Tobacco, Firearms, and Explosives if your business sells fireworks. Most industries, however, do not require licensing at the federal level. 

Other Common Business Licenses and Permits

Here are some common licenses and permits you may need:

• Industry-specific licenses for certain professions and industries, such as construction, plumbing, electrical, childcare, food handling, liquor, architecture, and finance
• Building and zoning permits
• Doing business as (DBA) permits using a name other than your LLC.
• Health licenses and permits at federal, state, and local levels
• Fire permits
• Sign permits

How to Apply for a Business License

You’ll apply for various business licenses and permits at various department and agency websites at the federal, state, and local levels. Standard state agencies that issue licenses are the taxation, health, and liquor control departments. 

Determine the Type of License Needed

The first step in applying for a business license is to determine the type of license required for your business. Different businesses need different licenses depending on their nature and industry. Begin by researching the requirements of your local city or county government to identify the specific licenses needed for your business. Consult industry standards and guidelines to ensure compliance with all necessary regulations. For added assurance, consider seeking professional advice from a business advisor or legal expert who can help clarify the correct license for your business operations.

Register Your Business

Before applying for a business license, you need to register your business officially. This involves choosing a suitable business structure, such as a sole proprietorship, partnership, corporation, or LLC. Once the structure is decided, register your business name, especially if you are operating under a name different from your own, often referred to as a “Doing Business As” (DBA) name. Additionally, you may need to obtain an Employer Identification Number (EIN) from the IRS, which is a common requirement for many business types.

Obtain Necessary Permits

Depending on your business type and location, you may need to obtain various permits in addition to your business license. Check local zoning laws to ensure your business location is compliant. If your business involves food, health services, or structural changes to your premises, you will need health and building permits respectively. These permits are crucial for ensuring that your business meets all local health and safety regulations.

Gather Required Documents

Gather all necessary documents before starting your business license application. These typically include proof of identity (such as a driver’s license or other government-issued ID), a detailed business plan if required, recent financial statements, and proof of your business location, like a lease agreement or property deed. Additionally, if your business requires professional licenses or certifications, ensure you have copies of these documents as well.

Complete the Application

Obtain the business license application form from your local government’s website or office. Fill out the form accurately with details about your business, including its name, address, type, and ownership details. Double-check all information to avoid delays in the approval process. Incomplete or incorrect applications can result in prolonged processing times or even rejections.

Pay the Fees

Check the fee schedule associated with your specific license type and prepare the necessary funds. Payment methods can vary, so be prepared to use checks, credit cards, or online payment systems as required. Submit the payment along with your application according to the instructions provided by the licensing authority.

Wait for Approval

After submitting your application and payment, you will need to wait for approval from the licensing authority. Many jurisdictions offer online tracking systems to monitor the status of your application. Be responsive to any requests for additional information or documents from the authorities to avoid delays. Approval times can vary, ranging from a few days to several weeks, so plan accordingly.

Renew Your Business License

Once your business license is approved, it is important to keep track of its expiration date. Ensure that you prepare for the renewal process well in advance. Gather any updated documents or information needed for renewal and submit your renewal application before the expiration date. Timely payment of renewal fees is essential to avoid operating without a valid license and incurring late charges.

How Much Does a Business License Cost in State?

License and permit fees vary. Generally, fees are nominal. One exception is liquor licenses, which can be pricey. 

Do Licenses and Permits Have to Be Renewed?

Some licenses and permits need to be renewed annually. Check with the issuing department for renewal requirements.

Is a Business License the Same as an LLC?

Since an LLC is a chosen business structure that operates within the law, a business license can be considered a legal tool enabling business operations. Most LLCs require at least one business license to function legally. 

An LLC with a business license in New York is authorized to do business in the entire state. However, depending on the nature of your LLC’s business, you may need a state business license, a federal business license, and various permits.  

Some business licenses enable business owners to legally engage in certain business activities, such as selling food products or alcohol. For example, a wine shop or food truck owner needs a specific license to sell their goods. The owner must first acquire a tobacco sales license if an LLC wants cigars. 

The legal requirements and regulations for business licenses depend on various factors, so you must take the time to review your LLC’s purpose and business goals. 

License laws vary from state to state, and some areas within states have additional license requirements designated only to specific localities within a state. Be sure to review the local, state, and federal requirements. 

To put it simply, an LLC is a type of business structure that is a choice. You can easily choose a different entity type for your business, such as a partnership or corporation. A business license is necessary to conduct business activities and ensures legally compliant operations. 

These are two very different things, which means your LLC will not eliminate any need for a business license because your state has approved its formation. So if you’re set on forming an LLC, a key step will be determining which business licenses your LLC needs. 

Visit your state’s website and carefully review LLC regulations and operation requirements. Then, if you need more help, don’t be afraid to reach out to the state agency responsible for issuing the business license you need to run your LLC.