Most businesses need at least one license or permit before they can legally open their doors — and many need several. The exact combination depends on your industry, your location, and how your business is structured. This guide explains the difference between licenses and permits, the most common types, and how to figure out which ones apply to you.
What is a business license?
A business license is official government authorization to operate a business in a specific location. It confirms that your business has met the minimum requirements to conduct commercial activity — things like registering your business name, paying applicable fees, and demonstrating basic compliance with local rules. Most cities and counties require one before you open.
Think of it as the baseline credential your business needs to exist legally in a given place. Without it, you're running without authorization — and local governments can issue fines or require you to shut down until you're properly licensed.
The agency that issues your license, the fee involved, and the renewal schedule all vary by jurisdiction. Your city or county clerk's office is usually the right starting point.
What is a business permit?
A business permit is approval from a government agency — typically at the state or local level — confirming that your business meets specific safety, health, or zoning standards. Unlike a general business license, permits are usually tied to a particular activity or physical space, and they often require an inspection before they're issued.
Common examples include health permits for food service businesses, building permits for construction or renovation, and zoning permits that confirm your location is approved for your type of business activity.
Permits protect employees, customers, and the public by making sure businesses in regulated spaces meet established standards. They're not optional — operating without a required permit can mean fines, forced closure, or both.
What's the difference between a license and a permit?
A license authorizes your business to operate. A permit authorizes a specific activity or confirms a specific condition — like a safe kitchen, a compliant building, or an approved location. Most businesses need both, and the two are often confused because they're sometimes issued by the same agency.
The clearest way to think about it: a license says your business is allowed to exist and operate in a given place. A permit says a particular aspect of how you operate meets the required standard.
A restaurant, for example, needs a general business license to operate, a health permit to serve food, and possibly a zoning permit to confirm the location is approved for food service. Each document covers something different.
What licenses and permits does my business need?
It depends on your industry, your location, and your business structure. There's no single universal list — a freelance graphic designer and a food truck owner have very different requirements, even in the same city. The SBA's licensing and permits guide is a reliable starting point for figuring out what applies to your situation.
Three questions help narrow it down: What does your business do? Where does it operate? Does it involve any regulated activity — things like selling food, handling hazardous materials, or providing professional services?
Most businesses need at least a general business license from their city or county. From there, industry and location determine what else is required. A tax professional or local business development center can help you build the right list for your specific situation.
What are the most common types of business licenses and permits?
Most businesses encounter a handful of license and permit categories when they're getting started. The ones that apply to you depend on your industry and location — but these are the types that come up most often.
The most common types businesses encounter are listed below. Each covers a different aspect of how your business operates, and many businesses need more than one.
Do I need a federal license or permit?
Most businesses don't need a federal license — but some industries do. Federal licenses and permits apply to businesses in heavily regulated sectors where a federal agency oversees the activity. If your business falls into one of these categories, federal authorization is required in addition to any state or local licenses.
Industries that typically require federal licenses or permits include agriculture (regulated by the USDA), alcohol production and sales (regulated by the TTB), aviation (regulated by the FAA), firearms and explosives (regulated by the ATF), and commercial fishing (regulated by NOAA). The SBA maintains a current list of federally regulated industries and the agencies that oversee them.
If you're not in one of these sectors, your licensing requirements will be at the state and local level. That's where most businesses spend the majority of their time when getting compliant.
Frequently asked questions about business licenses and permits
What licenses do you need to start your own business?
It depends on your industry and location. At minimum, most businesses need a general business license from their city or county and a federal Employer Identification Number (EIN) from the IRS. Businesses that sell taxable goods need a sales tax permit. Regulated professions — things like contracting, healthcare, or financial services — require professional licenses on top of that.
The SBA's licensing and permits guide is a good place to start identifying what applies to your specific business type and location.
What businesses don't need a license?
It depends. Some very small or informal businesses — things like occasional freelance work or a hobby sold at a local market — may not trigger a licensing requirement in every jurisdiction. But most businesses that operate regularly, earn income, and have a physical or online presence need at least a general business license from their city or county.
Even if your state doesn't require a general business license, your city or county might. Check with your local government before assuming you're exempt.
Do I need a business license if I have an LLC?
Yes. Forming an LLC gives your business a legal structure — it doesn't replace the licenses and permits required to operate. An LLC still needs a general business license from the city or county where it operates, plus any industry-specific licenses or permits that apply to its activities.
Think of it this way: the LLC is the legal entity. The license is the authorization to do business in a specific place. You need both.
How do I get a business license?
Start with your city or county clerk's office — that's where most general business licenses are issued. For state-level licenses, check your secretary of state or department of revenue website. For professional licenses, contact the relevant state licensing board for your industry.
The SBA's licensing and permits guide can help you identify the right agencies for your business type. Many jurisdictions now allow you to apply online, though some still require in-person filing or an inspection before a permit is issued.
Do I need a sales tax permit?
Yes, if you sell taxable goods or certain services. A sales tax permit — sometimes called a seller's permit — authorizes your business to collect sales tax from customers and remit it to the state. Requirements vary by state, and if you sell online, you may need to register in multiple states where you meet economic nexus thresholds.
Check your state's department of revenue website to find out whether your products or services are taxable and how to register.
What happens if I operate without the required licenses or permits?
You can face fines, be required to stop operating until you're properly licensed, or — in some industries — face legal action. Local governments take unlicensed business activity seriously, especially in regulated sectors like food service, construction, and healthcare.
Getting licensed before you open is much easier than catching up after the fact. If you're not sure what you need, a local business development center or a legal professional can help you build the right list.
How Bizee can help
Figuring out which licenses and permits your business needs takes research — and the list looks different for every business. Bizee's platform helps entrepreneurs get their businesses set up correctly from the start, including guidance on the formation steps that come before licensing.
If you're still in the process of forming your business, we can help you get your LLC or corporation filed so you're ready to apply for the licenses and permits that follow. Get started today and take the first step toward running your business legally and confidently.