14 types of business licenses and permits you need to know

When it comes to starting and registering your business, getting the right small business permits isn’t the most thrilling part of your entrepreneurial dream, but licenses and permits are crucial.

Figuring out business licenses and other regulations isn’t fun, but that doesn’t change the fact that it’s crucial for ensuring your company is compliant. There are 14 key types of business licenses and permits you might need to consider:  

Many permits are going to depend on your city, county, or state, as well as the type of business you’re operating. There are typically three types of permits: 

• Local: Your specific city, county, or municipality. 
• State: The state where you’re doing business. 
• Federal: Your industry is regulated on a federal level.

This is important to note because it means that you won’t necessarily get all the permits you need in one place.

Feeling unsure about where and how to get started? Let’s look at the types of business licenses and permits you may need, along with why you need them and how to obtain them:

1. General business license

Business licenses and permits are the legal requirements your company needs to acquire and follow to conduct business. Without them, you may have to pay fines or close up shop altogether. 

A general business license gives you legal permission to conduct business in your city and state. Business licenses are not the same thing as a business entity. If you have an established entity, like a limited liability company (LLC), you may also need a general business license. 

Note that sole proprietorships are usually an exception, as they don’t need a general business license to operate in most states.

In most cases, your state will issue your small business license. For that reason, the exact steps of the application process will depend on your state and the government agency you’re working through. 

• Requirement for: Those starting a new business, changing business structure, or moving locations.
• Examples: Entrepreneurs, business owners, or anyone conducting business activities.
• How to obtain: Your state will typically issue your small business license.

2. Employer Identification Number (EIN)

An Employer Identification Number (EIN) isn’t technically a business permit, but it’s an important box to check when getting your business up and running. While some sole proprietors use their Social Security number as their tax identification number (TIN), many small business owners opt to apply for an EIN. 

Even if you are a sole proprietor, applying for an EIN can still be a worthwhile step because it protects your personal Social Security number. 

• Requirement for: Anyone starting a business, hiring employees, or opening a bank account. 
• Examples: Any business entity, including partnerships, corporations, and LLCs.
• How to obtain: From the IRS.

3. Doing business as (DBA)

If you’re self-employed or a sole proprietor, you may choose to operate your business under a name other than your actual name. If so, you should register your chosen business name as a “doing business as" (DBA). 

You can register a DBA, also known as a “trade name” or “fictitious name,” with your secretary of state’s office. Other businesses, like LLCs and corporations, can also use a DBA. 

• Requirement for: A business looking to operate under a recognizable name without changing its legal structure.
• Examples: A sole proprietorship looking to use a business name that’s different from the owners’ legal name. 
• How to obtain: Your secretary of state’s office.

4. Federal permits

Depending on the service or product you’re providing, you may need to seek approval at the federal level and get a federal permit or license. Here are some examples of federally regulated businesses:

• Aviation
• Alcohol
• Agriculture
• Wildlife and fish
• Mining, drilling, and nuclear energy
• Transportation and logistics
• Television and radio

Check with the federal agency that oversees your industry to figure out which permits or licenses you might need. 

• Requirement for: Businesses in federally-regulated industries, like firearms and telecommunications. 
• Examples: A company looking to start a local broadcast channel will need to contact the Federal Communications Commission (FCC). 
• How to obtain: Relevant federal agency overseeing your industry.

5. Sales tax permits

If you’re selling products or services and need to collect sales tax, most states will require that you have a sales tax permit, also known as a seller’s permit, sales tax license, or a sales and use tax permit.

A sales tax permit is a business license you need when selling goods or services subject to sales tax. Examples of businesses needing such a permit include retail stores and online shops. 

To get one, visit your state’s Department of Revenue website (or a similar state agency) and complete a brief application with basic information about your business. Some states also require a fee to apply for the permit, but it’s usually pretty modest.

• Requirement for: Businesses doing retail or wholesale activities.
• Examples: Retail store or e-commerce business.
• How to obtain: Your state's tax authority.

6. Environmental permits

Your business might require an environmental permit if it produces emissions, deals with hazardous waste, or releases water into storm drains. You typically need environmental permits when conducting activities that may impact the environment, such as construction or industrial processes.

• Requirement for: Those engaging in construction, manufacturing, or other activities affecting the environment.
• Examples: Manufacturing plants, construction companies, or businesses handling hazardous materials.
• How to obtain: Environmental protection agencies at the federal, state, or local level.

7. Fire permits

Businesses that deal with flammable materials or occupy a space where large groups of people gather might need a permit from the local fire department.

These business licenses and permits ensure compliance with fire safety regulations. Note that fire safety inspections may be part of the fire permitting process. 

• Requirement for: Businesses, facilities, or events that pose a fire risk.
• Examples: Restaurants, theaters, or manufacturing facilities with fire hazards.
• How to obtain: Local fire department or relevant authorities.

8. Health permits

Certain businesses will also need health permits to ensure they meet safety regulations. For example, if you’re starting a restaurant or food establishment, you might need a health permit. Also, you might need one if you’re handling medical waste or operating a health care facility.

• Requirement for: Businesses in food service, health care, or other activities affecting public health.
• Examples: Businesses that deal with the preparation, packaging, and serving of food.
• How to obtain: Local health department.

9. Professional licenses

Certain occupations require professional licenses to help ensure competency. There are various licensed occupations, such as land surveyors, doctors, lawyers, cosmetologists, building contractors, and electricians. 

For example, when hiring an accountant, you can determine whether they have a certified public accountant (CPA) license by visiting the American Institute of Certified Public Accountants. 

To maintain occupational licenses, you may need to meet continuing education and compliance standards.

• Requirement for: Those practicing in regulated professions or occupations.
• Examples: Professionals in fields like law, medicine, or engineering. 
• How to obtain: Relevant professional licensing boards or regulatory agencies.

10. State permits

Businesses that engage in certain activities—like selling alcoholic beverages or antiques—will also need appropriate state permits and licenses. Many states regulate certain activities like transportation or professional services.

For example, if you operate as a childcare provider or provide educational services, you may need a state permit from the relevant agency. 

• Requirement for: Businesses operating in specific industries or conducting certain activities regulated by the state.
• Examples: Transportation companies or child care providers. 
• How to obtain: State regulatory agencies or departments.

11. Building permits

Much of your business’s regulation and permit requirements will depend on your location—meaning your local city, county, and state. However, you’ll need certain permits depending on the physical location of your business or building. 

For example, if you plan to build or significantly renovate a business building, you’ll need to get the right building or construction permits from your local government. Building permits ensure construction projects comply with safety regulations.

• Requirement for: Those constructing or altering buildings, adding structures, or making significant changes to existing ones.
• Examples: Contractors undertaking commercial construction projects.
• How to obtain: Local building departments or municipalities.

12. Home-based business licenses

While working from home may seem like the easiest way around business permit headaches, that’s not always the case. Some cities or counties will require a permit to operate your business out of your own home.

Aside from home-based business permits, you’ll also want to check for any restrictions in your lease or with your homeowners association (HOA). 

• Requirement for: Individuals operating businesses out of their homes.
• Examples: Solopreneurs and self-employed individuals. Freelancers, consultants, or artists running businesses from home.
• How to obtain: Local zoning or planning departments.

13. Sign permits

Some places have regulatory requirements at the local level that even require you to get a permit to display a sign. Sign regulations help with aesthetic and safety standards. 

If you plan on installing permanent or temporary signs for advertising or identification, you’ll want to check with your local planning department. 

• Requirement for: Businesses or individuals installing exterior signs.
• Examples: Retail stores or restaurants outdoor signage.
• How to obtain: Local zoning or planning departments.

14. Zoning permits

Unfortunately, you can’t always open your business wherever you’d like. Zoning regulations will tell you where you can and can’t do business. Zoning permits help maintain a balance between the different land uses in a community.

Suppose, for example, you want to transform an old farmhouse into a bed-and-breakfast. You might need to file for a special permit, such as a variance or conditional use permit. 

• Requirement for: Businesses or individuals making changes to land use, construction, or property development.
• Examples: Property developers or businesses expanding or changing land use. 
• How to obtain: Local zoning or planning departments.

Why you need the right business licenses and permits

Getting the correct permits is one of the first steps business owners should take before opening their doors.

Not having the correct small business permits can mean: 

• Suspensions or probations: You could be prohibited from doing business until you have the correct permits.
• Fees and fines: Not having the necessary permits can lead to financial penalties from federal or state agencies.
• Inaccessible funding: If you need a business loan, lenders will ask to see your small business license along with any industry-related permits. 
• Damaged reputation: If your customers or vendors discover you lack the right permits, your business may come across as untrustworthy.
• Lawsuit liability: If something goes wrong and you don’t have the appropriate permits or licenses, you may put yourself at legal risk. 

These are all avoidable if you confirm that you have the right licenses and permits.

Start your business with confidence

When you start a business, naming your company and finding customers are important, but so are having the right licenses and permits in place. With accounting software like QuickBooks Free to help you navigate your taxes and bookkeeping, you can check a few more things off your list, putting you one step closer to successful business ownership.