What Every Small Business Owner Needs to Know About Business License Requirements

Bob TannenhauserSmall Business

To legally open and operate your small business, you must obtain and comply with Federal, State and Local business licensing requirements. This is true even for home-based small businesses. The types of licenses required vary by industry and location. It is fair to say that all businesses will require some type of license or permit. In addition, when applying for a business loan, lenders will require that you have all necessary licenses and permits in place, including construction and renovation permits, before they will fund your business loan.


Federal Licenses and Permits Required for Businesses

Many business activities are regulated by federal agencies that issue licenses and permits including:


State and Local Business Licenses and Permits

The U.S. Small Business Administration (SBA) website has a tool called “Permit Me” that helps identify licenses and permits that may be required in your state or locality for your type of business. Some common business license and permits include:

  • Health Department Licenses for food and beverage vendors, processors and handlers.
  • Professional licenses for health care professionals, lawyers, accountants, hairdressers, real estate professionals, brokers, etc.
  • Fire Safety permits may be required by local Fire Departments.
  • Zoning permits may be required for certain uses (this can be often mistakenly overlooked by home-based small businesses).
  • Sales tax licenses for retailers.
  • General Business Licenses.
  • Sign Permits.
  • State and Federal taxpayer identification numbers.
  • Certificates of Occupancy


Once you obtain the proper business license(s) or permits, it is equally important to keep the licenses in good standing ad renew them before they expire. Failure to maintain the appropriate licenses can result in severe penalties including closure of your business.