Business licenses are essential as state and local governments (like counties, cities or towns) usually impose these business obligations.
ComplianceJanuary 13, 2023

Do I need a business license or permit?

Just about every business, from small businesses to large corporations operating in multiple states, has to keep up with business license, permit, and registration requirements for public safety, tax, or other reasons. Sometimes, even a home-based business needs a local home occupation permit. (These regulations can even extend to businesses with employees working from home.)

State and local governments (like counties, cities, or towns) usually impose these business obligations, but sometimes the federal government does, too.

CT note: In today’s highly regulated environment, keeping up with your business licensing helps maintain good public relations and your good reputation.

What business licenses do I need?

Given the large number of local, state, and federal agencies, a business may need any variety of specific licenses, permits, and registrations. These requirements vary by location and by type of business, and they can also change over time.

A change in operational activities or the addition of a new product or service may require a new license. Opening a new location may also require a new license, permit, or registration.

Here are five types of business licenses, permits, and registrations that a business might need.

1. Federal licenses

Federal licenses are typically required only for businesses regulated by a federal agency, such as the Securities and Exchange Commission and the Bureau of Alcohol, Tobacco, and Firearms.

2. State registrations

Forming an LLC or corporation requires filing formation or incorporation documents with the Secretary of State in the state where you are based.

Businesses that have to collect sales and use tax have to comply with registration requirements from the state tax authorities and obtain a state tax identification number.

States also commonly require employers to register with the Department of Labor for unemployment insurance.

3. Federal tax identification number

Also called an EIN, a federal tax id number (FEIN) acts as a social security number for your business. An FEIN is issued by the IRS and is required on all federal tax returns filed for your business. It is a requirement for corporations and LLCs, payroll tax filings, and more

4. Professional/occupational licenses and permits 

Certain products, services, and professions have specific licensing requirements. If your business involves the sale of certain types of products (like lottery tickets, liquor, or gasoline) or certain types of services and professions (like architecture, engineering, real estate, or insurance), you might need a special permit or an occupational or professional license.

5. Local licenses, registrations, and permits

Local jurisdictions, such as cities and counties, may impose various licensing and registration requirements on businesses.

  • Basic business license. Local counties and municipalities may require a general business license for the privilege of doing business in that jurisdiction.
  • Certificate of occupancy. This document states the legal use and/or permitted occupancy of a building.
  • Health department permit. Usually required for businesses involved with food preparation.
  • Zoning and land use permits. Local zoning laws may limit or prohibit certain business activity in designated areas.
  • Alarm permit. Required by many cities for the use of an alarm system.
  • Sign permit. Used to govern the appearance and/or location of business signs.
  • Fire and police department permit. This permit governs the public safety of a business location.
  • Home-based business license. Many local governments require a home occupation permit for home-based businesses. Be sure to check zoning requirements to see whether the type of business you wish to operate is prohibited in residential areas.  
  • DBA registration. A DBA (“doing business as”) filing allows a business to operate under a name other than its legal name. Corporations, LLCs, and other state-formed business entities can file DBAs to do business using a name other than the one included on their state formation documents. Sole proprietors will need a DBA as well if they are doing business under a name different from that of the owner.

CT note: Many business licenses must be renewed periodically.

Some industries require more licenses

Some industries, like daycare or aviation, are more highly regulated than others and may require licensing and registration at either the federal or state level, or both. These kinds of industries include the following:

How much does a business license cost?

The cost of a business license varies depending on the type of business activity you are engaged in and where your business is located.

Consequences for doing business without a business license

Usually, a business that fails to comply with its licensing obligations has to pay a fine or penalty. In some cases, however, authorities could shut down your business operations – costing both money and goodwill. And in recent years some authorities have increased enforcement against businesses that haven’t been complying.

Am I staying in compliance?

Over time, to stay in compliance, it helps to remember that requirements are not the only thing that changes—your business changes, too. 

CT note: Have you moved to a new location? Have you moved your headquarters? These kinds of changes could mean updating any registration, license, employer obligation filings, or permit requirements. 

A company with structural changes — such as converting a corporation to an LLC or vice versa or merging with another company — could also require changes to be made in order to stay in compliance. 

Another thing to consider is that if the officer or other responsible party listed on your registration, license, employer obligation filings, or permit changes, then you would likely be required to inform the appropriate jurisdictions of the change.

Related article: Events that trigger new business compliance obligations (infographic)


Regardless of what your business does, it’s vital to keep up with your business licensing requirements.  It avoids unnecessary fines, helps maintain your good reputation, and helps keep the wheels turning.

With guidance from your CT Corporation Business Consultant, you can develop a path to compliance. To learn more about how CT Corporation can help you manage your business license needs, contact a CT Corporation Specialist or call (844) 878-1800.

Troy Ayala
Compliance Business Consultant

Troy Ayala is a Compliance Business Consultant for CT Corporation. His responsibilities include research, delivering onsite training, and assessing CT Corporation customer workflow management for all transactions, including entity management.

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