Business Plan Center

Navigating business licenses and permits

While the requirements will vary by state and across industries, there are several types of business licenses and permits nearly every business needs to stay operational.

1. Business licenses

Start by filing for a business license with your city, depending on what business type you form. The city will determine if your location fits the zoning requirements for your business. If not, you might need to file for a conditional use permit, but be sure to check with your local government.

2. Professional licenses

Professional services such as those provided by doctors, lawyers, hairstylists, and dentists are required to have special licenses to operate. Consult your industry's leading agency to find out what particular licensing is required for your professional services business.

3. Federal licenses

If your business is in a federally regulated industry you will have additional licensing requirements. The alcohol, aviation, and transportation industries, for instance, require special licenses and permits from federal agencies.

4. Local licenses

Many professionals are required to pass state examinations to receive special licensing, such as plumbers, electricians, building contractors, and insurance agents. Some cities even require special documentation for certain occupations. Contact your state and city governments to find out what certifications you need. If your business is located outside of city limits, contact your county government.

5. Sales tax licenses

Sometimes called a seller's permit, a sales tax license can be obtained through your state government. Most businesses that sell taxable goods and services must have a seller's permit, or risk expensive penalties and fines.

6. Health and safety permits

The county health department must inspect businesses that intend to sell food in order for those businesses to receive a health permit. In some cases, you might also need a special permit from the fire department to establish capacity limits.

7. Labor department regulations

If you hire employees you will need to register your business with your state labor department, which will help you understand the requirements for providing benefits like unemployment insurance and workers' compensation.

8. DBA licenses

A "Doing Business As" license allows you to operate a business using a fictitious name, or one different from your own. Not all states require that you register for a DBA license, so be sure to check with your state government.

9. Sign permits

Many cities have regulations regarding sign locations, sizes, and even types that can be displayed. Take note of your city's guidelines before investing in a new sign.

10. Home occupation permit

If you run a home-based business, you'll likely need a home-occupation permit issued from your state or local government. Consulting and freelance businesses often don't need additional licensing beyond that, but businesses like childcare and food service might need supplementary permits. If you're a member of a homeowner's association, you also need to check its guidelines on home-based businesses.

If you're just starting your business, consider the time it'll take to obtain the necessary licenses and permits — that's time you won't be able to generate sales. To avoid costly fines once you're up and running, track your renewal dates by maintaining copies of all your licenses and permits. Make sure all documents are properly displayed, and remember that your licensing requirements might change as your business evolves.