Small Business Licenses: A Checklist of Everything You Need to Know

When you’re gearing up to start your own small business, a lot of exciting tasks need to get done: locking down your perfect business idea, choosing your business’s name, getting the word out, financing startup costs, and so on.

With all the exciting to-dos on your starting-a-business checklist, it’s easy to push aside the more tedious tasks that need to get done before your opening day. Take paperwork, for instance. No one likes to sit down and tackle a big stack of paperwork, let alone a busy and enlivened soon-to-be entrepreneur.

But filing small business licenses and permits is one of the most important steps to actually opening your doors for business. What kind of paperwork do you need for small business licenses? And where can you go to find it?

This is your ultimate small business licenses checklist to answer those questions. Here are the 15 small business licenses and permits you might need for your business.

All the Small Business Licenses and Permits You Need to Know

Virtually all small businesses need some type of small business license or permit to legally operate—that’s a sure thing.

But knowing which one you need to operate in your state and in your specific industry isn’t so cut-and-dry. Depending on the kind of small business you run, you need to obtain local, county, state, or federal small business licenses.

Let’s tackle your small business licenses checklist by going through what you need for each level of government: local, state, and federal small business licenses.

Small Business Licenses and Permits: Local Small Business Licenses You Need to Know

With some exceptions, here are the small business licenses and permits that generally all businesses need to secure with their local or city government.

Now, you might not need to obtain these small business licenses in the end, but it’s worth going through this checklist just to make sure you don’t need them. That way, you can be confident that you have everything you might need to legally run your business—and you won’t be blindsided by a missing mandatory small business license down the line.

These basic small business licenses might be required by your local, county, or city governments, so be ready to check for them all at the appropriate government office.

1. Local Business Operating License

A basic small business license essentially grants you the right to operate your business.

You might need your local or city government to issue you a local small business license to operate within your town’s or city’s limits.

Your city’s business license department will, of course, be specific to your location, so you need to locate the office on your own to obtain this small business license. If you don’t know where to start, your best bet is to go to your local city hall or courthouse to find the office where can obtain your business license.

And if you’re starting a business that technically is outside of your closest city limits, this general business operating license might come from your county’s government office.

2. Zoning and Land Use Permits

Once you fill out and file your local business license application, the city zoning department usually checks to make sure that your business’s location and area are zoned for your type of business and the parking area around your business meet the local zoning codes.

You might be starting a business in an area that’s already been zoned for the type of business you’re starting. Lucky you—no need to worry about adding specific zoning and land use permits to the list of small business licenses you need to obtain.  

But you can’t operate your business in an area if it’s not zoned for your type of business. You need to get a variance or conditional-use permit in order to operate in that area. You’ll need to present your case for business before your city’s planning committee to get the variance. When you present your business for land use permits, you’ll just need to show that operating your business in that area won’t significantly disrupt the character and safety of the neighborhood you plan to operate in.

3. Building Permits

If you’re lucky enough to be starting your business in the perfect space, maybe you won’t need to worry about small business licenses and permits for your building.

But if you’re planning on building an entirely new building, renovating an existing one, or installing new utilities or appliances in an existing one, you likely need to obtain building permits from your local government. This ensures that what you’re building or renovating is in line with safety codes and conforms to local requirements.

Your licensed contractor that you’re working with should know everything you need to secure with your local government for your business.

4. Fire Department Permit

Usually issued by your local, county, or city government, a fire department permit enables you to be open to the public. A permit from your fire department is especially necessary if your business uses flammable materials.

Some cities require that you have these small business licenses from the fire department before you open your doors for business. Others just require periodic inspections and certificates of inspection to keep your business open.

Every business owner should check to see if they need a fire department permit. But businesses that serve the public—think restaurants, retirement homes, hotels, day-care centers, gym studios, etc.—definitely need these small business licenses.

5. Health Licenses and Permits

If you’re operating a restaurant, starting a cafe, or opening a fitness facility—anything that could possibly relate to people’s health, really—you should pay attention to these small business licenses and permits.

Most local governments have health permits that small businesses in the area need to operate. The requirements you face for your business, again, will entirely depend on your local government. So go to your local town hall to figure out the health permits you need to operate your business in the area.

6. Signage Licenses and Permits

You might not have known it, but some cities and counties have restrictions on what your business’s signage can look like. We’re talking size, location, visibility, lighting, and so on.

If your business’s signage isn’t up to your local government’s requirements—and you have the licensing and permits to show it—your business could suffer from some serious fines. So to make sure your signs are legal, check in with your local government on what kind of small business licenses you need to follow signage codes.

7. Environmental Licenses and Permits

Environmental small business licenses and permits mostly fall at the state and federal government level, but it’s worth mentioning while we’re listing off your local small business licenses requirements.

Local governments are increasingly looking to protect their population and land’s health by regulating small businesses in the area. Environmental permits might regulate where you can produce and sell, air and water quality levels in your area, and waste removal requirements. Air quality boards are popping up all over the United States, so it’s important to check if you need a specific environmental license or permit with your local government.

Small Business Licenses and Permits: State Small Business Licenses You Need to Know

Once you’ve fully checked in with your local state government for the small business licenses you need, it’s time to move up a level.

What will you need to obtain in small business licenses and permits at the state level?

Well, as you know by now, small business requirements vary state-by-state. The full list of what you need lives on your state’s government website. But in general, here are the state-level small business licenses you should keep an eye out for.

1. State Business Operating License

If you’ve already obtained your local business license, then you know the general gist of what a state small business operating license is.

Essentially, states require all small businesses to have a business license for tracking purposes. Not only do these small business licenses grant you the right to operate your business in the state, but they help the state government track the business entity and keep a pulse on your revenues so they can issue taxation accordingly.

Most states have offices that are made specifically for issuing state small business licenses, but check out the U.S. Small Business Administration’s state business license office locator to find out where you can get yours.

2. Seller’s Licenses

You should also be aware that, depending on your industry, you could need another special business license on top of your general business license based on the type of goods you sell.

For instance, if you’re in the business of selling liquor, firearms, gasoline, or lottery tickets, your state probably requires that you have another small business license to do these things. The list of licenses for specific sellers could go beyond these industries for your state, so check with your state’s government office to make sure you have what you need to sell your goods.

3. Tax Registration and Permits

The IRS doesn’t technically “license” your business. But it does require that certain businesses obtain an Employer Identification Number (EIN), or a federal tax identification number. Businesses need to register for these small business licenses of sorts so that the IRS can identify your business entity and tax you as such.

Not every small business needs an EIN to conduct business. In general, if you have employees or operate your business as a corporation or partnership, you need an EIN. The IRS can tell you exactly what kind of business needs an EIN here.

According to the SBA, you also might need to register with local and state government agencies for other tax permits—like your sales tax license, income tax withholding, and unemployment insurance tax. These tax permits again will depend on the state you operate your business in, so be sure to check out the tax permits you need for your state.

4. Occupational Licenses

In many states, business owners in certain occupations need to secure specific small business licenses to operate legally. These are small business licenses that you’ll have to maintain with your state throughout the years.

Are you in an industry that needs a specific occupational license? You should reach out to your state government offices to find out.

But in general, you might need to lock down an occupational or professional license from the state if you’re in one of these professions:

• Accountants
• Electricians
• Plumbers
• Contractors
• Mechanics
• Collection agents
• Physicians
• Appraisers
• Real estate brokers
• Private auctioneers
• Repossessors
• Insurance Agents
• Cosmetologists
• Barbers
• Private security guards
• Private investigators
• And more!

The list of small business licenses you need for your specific occupation can go on and on. As a good practice, check with your state’s business licensing office to make sure you have what you need to launch a business in your profession.

Small Business Licenses and Permits: Federal Small Business Licenses You Need to Know

Moving beyond the state level and to the federal level, you need to know about a few important small business licenses.

Not all small businesses have to worry about these small business licenses and permits, but businesses in a few industries do. And it’s important that those businesses get these small business licenses right.

Small Business Licenses for Federally Regulated Industries

If you’re starting a business in a federally regulated industry—firearms, commercial fishing, aviation, and so on—then there’s a special list of small business licenses that you need to obtain for your industry.

Here’s a brief list of industries that absolutely need to secure special business licenses to operate:

• Agriculture: If your business involves importing or transporting animals, animal products, biotechnology, etc., you need to apply for a permit from the USDA to legally operate.

• Alcohol: You need a business license from the federal government along with your state’s business license if you’re selling alcohol as a part of your business. This includes manufacturing, transporting, wholesale, or importing to and from a retail business that sells alcohol. Visit the Alcohol and Tobacco Tax and Trade Bureau to get a list of exactly what you’ll need.

• Aviation: If your business involves operating or manufacturing and maintaining aircrafts, you need special small business licenses and permits from the federal government. You also need different licensing from the Federal Aviation Administration to run your business in the aviation industry.

• Firearms, ammunition, and explosives: If you’re in a business that manufactures, deals, and imports firearms, ammunition, or explosives, you need different licensing before you start your business. The licensing all falls under the Gun Control Act, and you can learn what you need to secure with the Bureau of Alcohol, Tobacco, Firearms and Explosives.  

• Fish and wildlife: For a business in the wild or commercial fisheries or wildlife industry, you need to obtain certain environmental permits and licenses before you get going. As a good rule of thumb, any business involving wildlife should check in with the U.S. Fish and Wildlife Service to see what exact permits they need.

• Maritime transportation: Does your business use cargo shipping overseas? You need to apply for a business license from the Federal Marine Commission.

• Mining, drilling, and nuclear energy: If your business is involved in drilling natural gas, oil, or other natural resources, you probably need to have a drilling permit from the government to actually do so. And if you’re in the business of nuclear energy, then apply for a business license with the U.S. Nuclear Regulatory Commission.  

• Radio and television: If your business broadcasts information over the radio, television, satellite, or cable services in the U.S., check in with The Federal Communications Commission to get the business license you need to operate.

• Transportation and logistics: This federally regulated business practice might apply to a number of different small business owners, so it’s worth paying attention to. If you operate an oversized vehicle or truck, you need to have a permit for any oversize or overweight vehicles. These are usually issued by your state government even though they fall under federal jurisdiction. You can check the small business licenses you need for transportation in your state here.

Small Business Licenses for Home-Based Businesses

Our small business licenses checklist has so far covered the documents that small businesses operating in commercial spaces need to know.

But what if like many small businesses out there, you operate your business out of your home?

If you run your business out of your home as a sole proprietor or consultant, you might not know that you too have a list of small business licenses and permits you need to secure. A lot of home-based business owners don’t know this and are fined for it.

So what do you need? Here are the basic small business licenses you should gather before operating your home-based business:

1. Home Occupation Permit

Almost all home-based small businesses need a Home Occupation Permit to legally operate. Consultants or freelancers might only need a Home Occupation Permit as a small business license.

A Home Occupation Permit essentially just shows that by operating your business out of your home, you aren’t significantly adding traffic, noise, or harmful environmental conditions to your area. The SBA’s list of state-by-state small business licenses can help you find and apply for a Home Occupation Permit specific to your state.

2. Property Use and Zoning Permits

Small business owners operating out of their homes should be aware of local zoning ordinances that apply to home-based businesses in their area.

Residential areas can have strict zoning regulations that might even prevent home-based businesses altogether. Don’t worry—it could be possible to get a variance that lets you operate out of your home. Again, check with your local or city government office to know what the rules and regulations are regarding home-based businesses in your area.

3. General Business Licenses and Permits

Most home-based businesses have to go through the same process to get the small business licenses that any business needs to operate.

If you’re a home-based business owner, you still likely need to have the following:

• General business license
• Professional and trade licenses for certain industries
• Sales tax permits
• Health, safety, and environmental permits
• Signage permits
• Building and construction permits

Unfortunately, you can’t dodge these general small business licenses as a home-based business owner. You, along with all other small businesses, will need to have these on your files in order to operate your small business legally.

Small Business Licenses and Permits: The Next Steps

Once you’ve dutifully made your way through your small business licenses checklist and secured all the documents you need on hand to operate, what’s next?

Well, now you can focus your attention on the important stuff—launching and growing a successful small business.

As for small business licenses, most of the heavy lifting is done. But you still need to be aware of managing and maintaining your small business licenses and permits—you want to make sure you’re always operating legally, after all.

So once you’ve tracked down and applied for the small business licenses and permits you need, display them properly, make copies for your own records, and keep track of your licenses and permits renewal dates.

Don’t let these documents get dusty and lost in your file cabinet—keep a close eye on them, always updating when the time comes around!

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from Fundera Ledger https://www.fundera.com/blog/small-business-licenses