What is a business license? Everything you need to know

What is a business license?

City, state and federal agencies often grant a business license to companies to allow them to operate in a specific location. Limited liability company (LLC), corporation and S corp owners may also receive permission to run their businesses from professional agencies. This is because some licenses are general, allowing you to simply open a business, while others are professional, depending on your industry and business activities. 

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Do I need a business license? 

Many small businesses will need some sort of license or permit to operate their businesses. These can often be obtained at the county, state or federal level. In the below sections, we breakdown license requirements at each level and the types of businesses affected by these requirements.

State licenses

Some states require a general business license, while others simply require a license for certain types of businesses. These types of licenses generally depend on your business’s location and the activities it performs.

For example, in Kentucky, businesses are not required to have a general, statewide business license. However, some business types must have professional licenses or permits to operate. Businesses can find out if they require a professional license by visiting the Kentucky Department of Professional Licensing.

Some types of businesses that may require state professional or occupational licenses include: 

• Those in the medical field, such as therapists, medical equipment suppliers, audiologists and dieticians. 
• Home inspectors. 
• Long-term care administrators. 
• Real estate professionals. 
• Metal recyclers. 
• Auctioneers.
• Interpreters.
• Private investigators.
• Construction workers. 
• Businesses that engage with or dispose of hazardous waste. 

County licenses

Depending on where you operate your business within the state, you may also need county-specific licenses and permits.

For example, Jefferson County in Kentucky has been collecting data on the county’s air quality to improve Louisville’s air quality. In keeping with this initiative, some businesses have been mandated to obtain permits.

In August of 2023, the Louisville Metro Air Pollution Control District proposed that the Ford Motor Company’s Kentucky truck plant should obtain a plantwide applicability limit (PAL) construction permit to operate. This permit aims to limit the plant’s emission limits to improve air quality in the area. 

Additional examples of county-level business licenses and permits include:

• Building permits.
• Signage licenses or permits. 
• Electrical permits. 
• Emergency management permits. 
• Fireworks permits. 
• Landscaping permits. 
• Food establishment licenses or permits.
• Plumbing permits. 
• Licenses to serve alcohol in various settings.
• Zoning permits. 
• Childcare permits. 

Federal licenses

If your business activities are federally regulated, you must apply for a license to operate. Some federal agencies that supply such licenses or permits include the U.S. Department of Agriculture, the Federal Aviation Administration and the U.S. Fish and Wildlife Service.

However, you may find that after contacting a federal agency, it directs you to the state counterpart to actually obtain the permit or license. For example, if your business operates oversized or overweight vehicles, you must contact the U.S. Department of Transportation to inquire about required licenses or permits. Often, the Department of Transportation will then direct you to the office within your state that issues such licenses.

Types of businesses that must obtain licenses or permits required by the federal government include:

• Businesses involved with transportation and logistics. 
• Businesses involved with nuclear energy. 
• Mining or drilling companies. 
• Sea cargo businesses. 
• Commercial fisheries. 
• Businesses that engage in wildlife activity. 
• Businesses that manufacture, sell or deal in firearms, ammunition or explosives. 
• Businesses that operate or transport goods by aircraft. 
• Businesses that transport animals (such as livestock), animal products, biologics or plants across state lines.

How to get a business license

1. Form your business

Before you can apply for a business license or permit, you must form your business. This includes naming your business, hiring or appointing a registered agent and submitting formation paperwork (articles of organization, for example) on a state level. While not a requirement for all, you may also be required to obtain an employer identification number (EIN) or a state tax ID number before obtaining specific licenses or permits. 

To learn more about how to start a business, read our step-by-step business formation guide.

2. Determine required state or county professional and occupational licenses

Most states offer an online licensing database, index or survey to help you determine the types of licenses or permits your business may need. However, you may still need to contact county entities to learn about business licensing or permit requirements. 

For example, New York state offers an online business express walk-through wizard that creates a checklist of requirements to operate your business, including required licenses or permits. It also offers a search index for business licenses or permits, including professional licenses.

However, these New York results often only show state permit or license requirements. Business owners must also reach out to their county or local clerk to learn about county-specific permits or licenses.

3. Determine the federal licenses you may need

To learn about your business’s licensing requirements on a federal level, you must go through the government entities that pertain to your business’s industry or activities. Some of these federal regulatory entities may direct you to collaborative state-level agencies. 

Some of the federal entities businesses must contact for such inquiries include: 

• The U.S. Department of Agriculture: Contact this entity if your business transports or imports animals, genetically engineered organisms, soil or plant life across state lines.
• Alcohol and Tobacco Tax and Trade Bureau or the Local Alcohol Beverage Control Board: Contact this entity if your company produces, sells or distributes alcohol. Some of these licenses, though regulated federally, may need to be obtained by local or state agencies. 
• Federal Aviation Administration: Contact this entity if your company is in the aviation industry (including pilots of aircrafts, airports and spaceports).
• Bureau of Alcohol, Tobacco, Firearms and Explosives: Contact this entity if your company sells, produces, stores or uses alcohol, tobacco, firearms or explosives.
• U.S. Fish and Wildlife Services: Contact this entity if your company imports, exports, sells, removes, transports, possesses or disperses wildlife or chemicals that may impact wildlife. 
• National Oceanic and Atmospheric Administration Fisheries Service: Contact this entity if your business is a fishery or engages in fishing activities, such as recreational, commercial or subsistence fishing.
• Federal Maritime Commission: Contact this entity if your business operates as an ocean freight forwarder (OFF) or non-vessel-operating common carrier (NVOCCs). 
• Bureau of Safety and Environmental Enforcement: Contact this entity if your business produces offshore renewable energy.
• U.S. Nuclear Regulatory Commission: Contact this entity if your company is a reactor or fuel cycle company or produces, distributes or disposes of commercial nuclear energy or fuel. 
• Federal communications commission: Contact this entity if your business is a radio or television broadcast station or broadcasts by radio, television or communications satellite.
• U.S. Department of Transportation: Contact this entity if your company operates overweight or oversize vehicles. As with many federal licenses, these licenses are regulated federally but issued on a state level.

4. Apply for your business licenses

To obtain your business licenses or permits, you must contact the agencies, associations or boards that administer and regulate them. For example, to obtain a license to operate an overweight or oversized vehicle across state lines, you may have to contact each state in which you plan to travel, such as the Alabama Department of Transportation or the Colorado Department of Transportation. However, since this activity is federally regulated, the U.S. Department of Transportation can guide you on contacting relevant state agencies. 

Admittedly, discovering and applying for all of the licenses your business may need on a local, state and federal basis can be confusing and tedious. The good news is that there are business formation companies that can take this whole process off your plate. 

ZenBusiness, for example, offers custom business license and permit reports for $99. When you purchase one of these reports, you get a summarized list of all the licenses and permits you must obtain on a local, county, state and federal level. It also offers instructions on how to obtain each of the licenses and permits. 

From there, its worry-free compliance service keeps track of all of your business compliance requirements on an ongoing basis, including renewing licenses when needed. If you form your business through ZenBusiness’s formation services, this worry-free compliance service is free for the first year and renews at $199 annually. 

Other business formation companies that offer business license reports or application services include LegalZoom and Bizee. 

Featured LLC service offers

ZenBusiness

Learn More

Via ZenBusiness’ website

Free version available

Yes

Lowest published package price

$199

Live chat

Yes: Human

LegalZoom

Learn More

Via LegalZoom’s website

Free version available

Yes

Lowest published package price

$249

Live chat

Yes

Northwest Registered Agent

Learn More

Via Northwest’s website

Free version available

No

Lowest published package price

$39

Live chat

Yes

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