The State-by-State Guide to Business Licenses

The State-by-State Guide to Business Licenses

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One of several crucial steps in the process of starting a business is obtaining the proper licenses and permits to legally operate in your area.

Federal, state and local government entities use licenses and permits to track your business’ revenue for tax purposes and protect the public from potentially harmful business practices. Professional licenses indicate your level of expertise in your particular field and are required for a range of occupations including physicians, plumbers, accountants, real estate agents and cosmetologists.

These are different than business registration requirements, which vary depending on your business entity. In this guide, we’ll help you determine which state business licenses you may need and where you can find them.

Overview of state business licenses

State-level regulatory agencies may want you to acquire certain licenses and permits based on the type of services that you offer or products that you sell. Some states may require you to apply with your city or county. Here are a few examples of business licenses you may need to obtain:

General business operating license: Some states require all business owners to obtain a general license to operate.

Seller’s license: A state-regulated seller’s license would be required if you sell or lease items that would be subject to sales tax when sold at retail.

Tax registration and permits: You would need to acquire the proper tax permits or register with the correct agency if your state requires it to collect taxes. For example, Texas business owners who sell or rent personal property or sell taxable services must have a sales tax permit.

Professional licenses: Professionals in certain industries may need to be state certified to conduct business within the state. Safety professionals in North Carolina, for instance, need to be certified at the state level.

Environmental permits: Businesses in industries such as oil and gas or forestry may have to comply with state environmental regulations. Permits could be required to operate.

Some industries are federally regulated as well and require additional licensing. If you run a business in an industry such as agriculture, alcohol, firearms and ammunition, fish and wildlife, or radio and television, check with the related government departments, like the Department of Agriculture or Alcohol and Tobacco Tax and Trade Bureau, to apply for the appropriate permits. Most businesses typically have to comply with the U.S. Department of Labor’s Occupational Health and Safety Administration as well.

Where to obtain a business license in your state

To find out which licenses you need to run your business, you should check with the proper agency in your state. We’ve compiled a list of state organizations where you could find out more about which business licenses are essential.

Additional business license requirements you may face

While your industry is most likely to determine which permits and licenses you need, your business location could be a factor as well. You may have to abide by your city’s zoning and land use permits that regulate where auto dealers or food trucks, for instance, conduct business. You may be able to research a location you have in mind in your city to see if it’s compatible with the type of business you’re interested in starting.

Home-based businesses have to comply with additional regulations from local entities. To run a home-based business, you may need a home occupation permit to comply with city and county zoning laws. If your neighborhood isn’t zoned for business activity, you may have to take an extra step and apply for a conditional-use permit as well.

Construction or signage for home-based businesses requires permission from local government entities. You may be limited in the size and type of sign you can place on your property. You may also need a permit to make major home renovations for business purposes.

Homeowner associations also set rules for home-based businesses. The organization could restrict what type of business you operate out of your house. Check your HOA guidelines before launching a home-based business.

Business licenses: the bottom line

Delays in license or permit approval could slow down your best efforts to get your business up and running in a timely manner. And operating without the proper paperwork could result in penalties for your business. Be sure to check with federal, state and local organizations to make sure you have the right business licenses before opening your doors. If you have additional questions about acquiring a business license, you could reach out to your local Small Business Development Center or Chamber of Commerce for help wading through your state’s regulations.

Justin is a Sr. Research Analyst at ValuePenguin, focusing on small business lending. He was a corporate strategy associate at IBM.