Obtaining all required business licenses is a critical step in starting your business. Operating without the proper licenses can result in fines, business disruptions, and damage to your reputation.
Compliance23 Juni, 2026
What licenses do you need when starting a business?
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- Businesses typically need to obtain several licenses or permits from a state or local agency before they begin operating. Businesses in certain industries may also require a federally issued license.
- Required licenses depend on the nature of your business, its location, and regulations in your jurisdiction.
- Business license compliance is ongoing. Renewals, business changes, and changing regulations can create new licensing obligations after your business is up and running.
In this article, we explain the different business licenses and permits a small business may need and best practices for staying compliant with rules and regulations.
Common small business licenses, permits, and registrations
Business license requirements apply to companies of all sizes and structures, including LLCs, corporations, and sole proprietorships.
When starting a business, you will typically need a general business license. Regulated industries often require additional specialized licenses and permits.
- General business license: Issued by a county or municipality, a general business license authorizes you to operate within that jurisdiction. If you have multiple locations, you may need a separate license for each one, even within the same state. Note that Washington, Nevada, and Alaska also have state-level licensing requirements, so businesses there may need licenses at both state and local levels.
- Employer identification number (EIN): An EIN is a federal tax ID issued by the IRS. You'll need one if you have employees or operate as a formal business entity like an LLC, LP, or corporation.
- DBA: If you plan to operate under a name other than your legal business name, you'll need to register a DBA, sometimes called a fictitious business name or trade name, with your state or local government.
- State tax registrations and permits: Many states require businesses to register with their department of revenue and obtain a state tax ID. If you sell taxable goods or services, a seller's permit is also typically required, along with any product-specific licenses for regulated items such as alcohol, tobacco, firearms, or gasoline.
- Professional or occupational licenses: Some businesses and individuals must obtain a professional or occupational license from a state licensing board. (Ex. pharmacy, construction, financial services, insurance)
- Employee registration: Employers are generally required to register for payroll taxes, workers' compensation, and unemployment insurance, and to report new hires to the appropriate state agency.
- Zoning compliance: Local governments use zoning laws to regulate where certain types of businesses can operate. Depending on your location, you may need zoning approval and a certificate of occupancy before opening your doors.
- Home occupation permit: Many local governments require home-based businesses to have a home occupation permit.
- Local health and safety: Local governments may require businesses to obtain health and safety permits depending on the nature of their operations. (Ex. health permits for food-related businesses, alarm permits, signage permits)
- Federal licenses: Certain industries are subject to federal licensing requirements in addition to state and local obligations. Examples include food processing and manufacturing (FDA), selling fresh or frozen agricultural products above certain quantity or value thresholds (USDA PACA license), and transportation and logistics (U.S. Department of Transportation).
Some small businesses will need to obtain federal licenses, permits, or registrations from a federal agency. Some examples include:
- Food processing or manufacturing (regulated by the Food and Drug Administration)
- Alcohol, tobacco, or firearms (regulated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives)
- Perishable Agricultural Commodities Act (PACA) licensing (regulated by the USDA)
- Drug manufacturing (regulated by the Food and Drug Administration)
- Investment advising (regulated by the Securities and Exchange Commission)
- Transportation and logistics (regulated by the U.S. Department of Transportation)
To learn more about the legal requirements for starting a business, view our checklist: Legal requirements for starting a business.
Easily manage complex requirements
There are over 75,000 federal, state, and local jurisdictions. As their compliance requirements become more complex, we’re the partner that can help you manage them all.
How long does it take to get a business license?
There is no universal timeline for obtaining a business license. Processing times vary by license type, issuing agency, and jurisdiction. While some licenses are issued within a few days, others can take several weeks or months, particularly for regulated industries that require additional review or inspections.
Consider someone looking to open a restaurant in Los Angeles. A general business license (called a Business Tax Registration Certificate) is issued as a temporary certificate upon completing registration with the Office of Finance, with a permanent certificate mailed within four to six weeks. If the location does not meet local zoning requirements, the owner would also need to apply for a land use entitlement from the Planning Department, a process that requires a public hearing and can take several months. This is on top of any state-level requirements, such as obtaining a seller's permit or an alcohol license.
To avoid delays, research licensing requirements early and submit a complete and accurate application.
What are the penalties for not having a business license?
Failing to obtain proper licenses and permits puts your business at risk. Depending on the jurisdiction and severity of the violation, consequences can include:
- Fines and penalties: Unlicensed businesses may be subject to fines, back taxes, and penalty fees. In some cases, fines can accrue daily until the violation is resolved.
- Suspension of operations: Authorities can order a business to cease operations until the proper licenses and permits are obtained, resulting in lost revenue and productivity.
- Lost business opportunities: Without the proper licenses, your business may be ineligible to bid on certain projects or contracts. Many clients and government agencies require proof of licensing as part of the bidding process, particularly in industries like construction.
- Delays in launching products or services: Missing licenses can also delay your ability to bring new products or services to market.
- Criminal charges: In some cases, operating without the required licenses can result in criminal charges, particularly in heavily regulated industries.
- Reputational damage: License violations can become part of the public record, potentially damaging your reputation with customers, partners, and investors.
Avoiding these penalties requires more than obtaining the right licenses at the outset. Staying compliant is an ongoing responsibility that requires attention as your business grows and changes.
CT Corporation can help you identify, obtain, and maintain the appropriate business licenses, permits, and tax registrations that your business needs. Aided by our proprietary technology, CT Corporation helps alleviate the burden of business license management.
How do you maintain business license compliance?
Here are several best practices that can help you maintain business license compliance and remain in good standing with licensing agencies.
Keep a master list of all renewal dates
Keep a record of license or permit renewal dates and make sure your master list includes the information and fees associated with renewals. Once you have your master list, set up a reminder system that alerts you of pending renewals in advance of deadlines.
Review your licenses when your business changes
Each time there is a change to your business operations, check to see if there is any impact on your existing licenses or if there is a need for additional licenses. For example, if you start selling or manufacturing a new product line, change your business name, or restructure your business entity type, you will need to update your licenses accordingly. You may even need to update your information if you change your hours or days of operation.
Keep thorough records
For each license or permit, keep a record of the transaction details, including the license type, fees paid, payment date, and receipt of payment. Having this information can help streamline renewals and support your business in the event of an audit or compliance review.
Consider working with a managed service provider
For businesses with multiple licenses across different jurisdictions, managing renewals and staying current with changing requirements can be a significant administrative burden. Outsourcing business license research, applications, management, and renewals can help you take the pressure off internal resources and allow you to focus on your core activities. Working with a managed service provider that specializes in the efficient processing of business licenses can help you keep up with changing compliance requirements and reduce the risk of lapses or missed deadlines.
Learn more
Determining the exact licenses and permits you will need to legally operate can be challenging, especially since these can be issued by multiple authorities at the federal, state, and local levels of government.
To learn more about how CT Corporation can help you manage your business license needs, contact a CT Corporation business license specialist.