How to get your business license: A guide for all 50 U.S. states
If you’re getting your new business off the ground, one of the first things you’ll need to do is get all the appropriate licenses and permits so you can operate legally.
The bad news is that this often involves a stack of paperwork. The good news? We’re here to walk you through the FAQs and the ABCs of getting a general business license—as simply as possible.
- What is a business license?
- Why is a business license required for your small business?
- The different types of business licenses
- How much does a business license cost?
- How long does it take to get a business license?
- The 4 steps to apply for a business license
- A state-by-state guide to getting a small business license
So, how do you get a business license? Let’s get into it.
What is a business license?
The term “business license” sounds simple, but it includes many licenses, seller’s permits, and other paperwork you might need to run your small business legally.
A business license is any document issued to you by a government agency that grants you the right to operate business activity in your area. It could refer to an operating license (which permits you to run your business) or a seller’s permit (which allows you to sell your product or service and collect sales taxes—this applies to online services, too!).
Just about every business needs some kind of license to operate. So if you’re asked, “Do I need a license?” the answer is—yes. But depending on your area and industry, you may need different licenses. (We’ll talk more about that below.)
Why is a business license required for your small business?
It can be frustrating to realize that you need to ask for permission to operate. But there are some good reasons for licensing requirements. Here are the 3 main ones:
1) A license is required to identify your business
Applying for a license lets your local and state authorities know what your business is and how you plan to make money. This is important information because they’re in charge of making sure business runs smoothly and legally in your area. Suppose they didn’t know the business names of any businesses in the area. That would be hard for them to ensure everyone follows the law and conducts business fairly.
2) Licenses help protect public health and safety
The licensing requirements help local leaders know exactly which businesses are selling products and services to the community—and what kinds of products or services they’re selling. If a business gets a license for food, for example, authorities know that this particular business is selling a product that could potentially cause sickness, and they can do safety checks accordingly. (Because no one wants to live in a world where food isn’t held to a high safety standard.)
3) Licenses identify your business for financial and tax purposes
Licensing is one way local governments know who should be paying business taxes in their area. Almost every business owner must obtain an Employer Identification Number (EIN) or a “Tax ID.” Don’t get caught up with the IRS.
The different types of business licenses
First, know that there’s no one-size-fits-all answer because the licenses your business needs will depend on where you are and what kind of business you run. And you might even need separate licenses at the county, city, and state levels. (Sorry.)
You’ll also need to get a federal license if you work in any of the following industries or occupations:
- Alcoholic beverages
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
Also, if you’re in an industry regulated by a commission, association, or a board, know that you might need to present your certification before getting your business license. (For example, if you’re looking to start a landscaping business, you may need to present evidence of your landscaping education to get a license—depending on which state you’re in.)
A quick word of advice here: If you have any doubts about what kind of specific licenses you need for your small business or startup, we recommend you contact your local Chamber of Commerce or the Small Business Administration (find a local SBA office here). They’ll be well-versed in local laws and should be able to give you some specific, helpful advice on which licenses you’ll need to stay legal in your area.
How much does a business license cost?
Licenses vary greatly by business location, industry, and business structure. For example, a San Francisco restaurant license might cost $100 more than a Los Angeles salon license. You could spend anywhere from $50 to hundreds of dollars.
Here’s the important takeaway: Licenses do cost money, and you’ll need to make room in your budget accordingly. That’s just the cost of doing business!
Another important point: Many business licenses have an expiration date, which means you’ll need to keep track of which licenses will expire and be ready to pay the business license fees to renew them.
That means you’ll have to get—and stay—organized! (We provide some suggestions a little further down the article.)
How long does it take to get a business license?
How long it takes to get your business licenses depends mostly on what kind of licenses you need and what state you plan to operate in. It could take anywhere from a few days to a few months.
For example, if you plan to open a clothing shop in a small town—which probably doesn’t process many business applications—there’s a good chance you’ll get approval in a few days or less. But if you’re planning to open a restaurant that sells alcohol in a large suburb, you should plan for a long lead-time getting your liquor license—it could take a while!
Ask your local business organization how long business permit approvals usually take in your area. Then apply early for permits with long approval times. You don’t want to put off your grand opening because you’re waiting for a license.
The 4 steps to apply for a business license
The process for getting one depends a lot on where you are, but, in general, here’s how to obtain a business license:
1. Do your research and create a business plan
The first major step is to gather all the information you’ll need to get your licenses—and we recommend you get organized.
Start by creating a spreadsheet or other document to gather your research—you’ll want to keep track of the information, so you don’t repeat your efforts later. Then, for each kind of license you need, find and write down the following:
- Your business license requirements
- How often the license needs to be renewed
- What the license currently costs
- The contact information of the agency which will issue you the licenseHow long it typically takes to get the license. This is often informal information that you can get from other entrepreneurs or the local Chamber of Commerce.
2. Submit your business license applications
Turn in any paperwork that’s required to the licensing agency. (Be sure to double- and triple-check all the details, so your application doesn’t get delayed.)
3. Get your licenses
The best part is next: getting approved!
Depending on where you are and what kind of business license you’ve applied for, you may need to wait to see if you’ve been approved. Sometimes it’ll only take a few days. Sometimes it can take weeks—or longer.
(And, hey, if you’re waiting, now’s a great time to grab your Business Owner’s Policy—most small businesses need one, and you can get it in about 5 minutes with Huckleberry. Everything’s easy and online.)
4. Renew your licenses as they expire
Many business licenses expire after a set period. So, as you acquire the necessary permits and licenses, keep careful notes of the specific date each license was issued and when each license will expire. You can use the license organization document you started in Step 1.
Then, check on your organizational document periodically—every 6 months or so—and stay on top of renewals. You do not want to run your business illegally.
A state-by-state guide to getting a small business license
Finally, if it’s not obvious by now, no 2 states are exactly alike for getting a business license. Because of that, we’ve put together this handy reference guide with links directly to the rules in your state. Nice, right?
Just scroll down and tap the link next to your state to get full details on what you’ll need in your area. (And don’t forget to visit the U.S. Small Business Administration’s resource page at sba.gov, too. When you enter your ZIP code, you’ll get a useful list of what you’ll need to start a small business in your specific area.)
Hey, hope this was helpful.
While we’ve got you: A quick reminder that you can insure your small business online with Huckleberry in minutes—way less time than it takes to get a business license.