How To Get a Business License in 5 Simple Steps (2024)

This post is for information only. Requirements are updated frequently and you should do your own research and reach out to a qualified legal and tax adviser. Businesses outside of the United States will have different steps and requirements.

How you get a business license—and whether you actually need one—depends on where you plan to operate. And while it may feel like another time-consuming task on your long to-do list, applying for a business license application can be quite impactful. In fact, it may even determine whether you can stay in business.

Read on to learn how to get a business license and whether your state requires one.

What is a business license?

A business license is a government-issued legal document that permits individuals or companies to operate within a specific jurisdiction. It proves compliance with local regulations, and allows you to conduct commercial activities. 

Obtaining a business license also legitimizes your venture and demonstrates your commitment to operating within the boundaries of the law, fostering trust among customers, partners, and regulatory bodies.

Do you need a business license?

Whether you need a business license depends on the nature of your business and your location. 

In some jurisdictions, a business license is required. This is especially true for brick-and-mortar establishments where local authorities use licensing to regulate and monitor activities such as zoning compliance, health and safety standards, and tax obligations, but it can also apply to online businesses.

Failing to secure a required license can result in fines, legal complications, or even a forced shutdown.

Voluntarily obtaining a business license can enhance your credibility and protect your venture from legal issues down the line.

What you need to get a business license

While the federal government only requires business licenses in certain cases, all businesses and business types can obtain a federal tax ID, or employer identification number (EIN), for free at IRS.gov.

To get your state business license, you generally need: 

• Owner name and contact 
• Business name and contact
• An EIN
• Required permits
• Required paperwork
• Associated fees (outlined below)

Each state has its own process. Check directly with your local jurisdictions to confirm what’s needed to get your business license. 

Types of business license

License types include:

• Federal licenses: Required for businesses regulated by federal agencies, including sectors such as aviation, broadcasting, and alcohol manufacturing.
• Industry license: Health care professionals, contractors, and financial institutions often need industry licenses to ensure they meet the specialized regulations governing their field.
• Business operating license: Typically issued by municipalities to ensure adherence to local zoning, safety, and operational considerations.
• DBA (doing business as) registration: Required when a business’s operating name differs from its legal business name, also known as a trade name or fictitious business name.
• Seller’s permit: Also known as a sales tax permit, this allows the collection of sales tax on goods and services and is essential for retail or wholesale businesses.
• Special permits: Often required for specific activities or situations, like hosting events or serving alcohol.

How to get a business license

1. Register your business
2. File for an employer identification number (EIN)
3. Acquire a federal business license or permit
4. Acquire state and municipal licenses
5. Renew your business license

To obtain a license, you’ll need to register your business with local, state, and federal regulatory agencies.

1. Register your business

Once you’ve determined what your business is, registering it is the first step toward making it official. Here’s an overview of how to register your business:

Choose a business structure

Choose a legal structure that aligns with your business goals: 

• Sole proprietor: A sole proprietor runs an unincorporated business by themselves with essentially no legal distinction between owner and business. Sole proprietorship is the default, so you don’t have to file paperwork to establish it.
• LLC: An LLC (limited liability company) establishes a separate legal entity, providing liability protection for the business owner. An LLC can be formed by one or more owners, aka “members.” A business with one member is a single-member LLC. If two or more people have membership interests, it’s a multimember LLC.
• S corp: An S corporation is a business structure that isn’t subject to corporate income tax, and is available to private corporations like LLCs or partnerships. In an S corp, profits pass to shareholders, who then pay personal income tax on those profits. An S corporation requires fewer than 100 owners and must be governed by a board of directors following corporate bylaws. S corps must submit a Form 2553 to the IRS. 
• C corp: A C corp, or C corporation, is a legal business structure treated as a separate entity from its owners. A C corp allows for an unlimited number of shareholders. A shareholder could own a single share of the company, or millions of shares. C corps must submit Form 1120 to the IRS.
• LLP: An LLP (limited liability partnership) provides business partners with personal liability protection so they don’t assume liability for the wrongdoings of other partners, employees, or the partnership itself. Some jurisdictions require law, accounting, or architecture businesses to be licensed as LLPs. 

Your business’s structure determines how it is taxed, as well as your level of personal liability. Establishing a clear business identity provides a solid foundation for regulatory compliance and operational transparency. 

2. File for an employer identification number (EIN)

To apply for an EIN, you’ll need to provide basic information about your business, like its legal structure, purpose, and ownership details. Obtaining an EIN is a prerequisite for various licensing procedures and simplifies tax reporting and other administrative tasks.

3. Acquire a federal business license or permit

Businesses operating in certain industries must acquire a federal license. Businesses in qualifying industries need to contact a corresponding federal agency. Here are the industries and agencies: 

• Radio and television broadcasting: FCC
• Transportation and logistics: DOT
• Alcohol: Alcohol and Tobacco Tax and Trade Bureau and the Department of Alcoholic Beverage Control
• Agriculture: US Department of Agriculture
• Aviation: FAA
• Firearms, ammunition, and explosives: ATF
• Fish and wildlife: US Fish and Wildlife Service
• Commercial fisheries: NOAA Fisheries
• Maritime transportation: Federal Maritime Commission
• Mining and drilling: Bureau of Safety and Environmental Enforcement
• Nuclear energy: US NRC

4. Acquire state and municipal licenses

Once you have federal licensing squared away, check with state and local governments. Locational requirements differ, but you’ll generally need to gather personal and business information, pay fees, and complete and submit forms. 

5. Renew your business license

Most licenses require periodic renewal. In some states, you’ll renew annually, in others every three years. Some renewals are free, others come with fees. 

Either way, renewing is important. An expired business license can generate violations and fines. 

How much does a business license cost in each state?

Just as federal licensing fees vary by industry, state license and permit fees vary by state and business activity. Either way, licensing is just one of the costs of starting a business.

Alabama

Alabama requires two separate business licenses, each non-refundable (except in the case of duplicates):

• Business privilege license: Free or paid depending on type
• Municipal business license(s) from your local jurisdiction(s): Maximum $100

The business privilege license must be renewed annually by October 31, or pay a 15% tax penalty plus interest. 

Alaska

A business license in Alaska costs $50 annually. Licenses expire on December 31, unless issued after October 1. A license issued after October 1 is valid for the remainder of the year, as well as the following calendar year.

Alaska offers a senior discount and a disabled veterans discount. Qualifying businesses pay $25 instead of $50.

Arizona

In Arizona, sellers must get a transaction privilege tax (TPT) and business license through the state’s License Compliance Program. TPT license fees vary by jurisdiction, ranging from $1 to $50 annually. 

Arkansas

In Arkansas, fees range from $50 to more than $1,000 per year, depending on business type. 

California

Businesses in California aren’t all required to be licensed at the state level, but those in certain counties and cities are. Also, some industries are state regulated and require licensing from a corresponding board or division. Check the CalGold permit assistance tool for license requirements and fees. 

Colorado

Certain businesses in Colorado require licensing, and costs for state-regulated businesses vary by industry. There may be additional requirements by location, so check with your municipality. 

A business license in Aurora, for instance, is valid for two years and costs $27, plus an $18 application fee. In Fort Collins, any entrepreneurial or home-based business must also register as a home business, which costs $25 and is valid for two years.

Connecticut

In Connecticut, fees are based on business type. Charitable solicitations, for example, don’t need to pay an initial licensing fee. Other types of businesses do, with fees ranging up to $5,000.

Delaware

In Delaware, a business license costs $75 for the first year. A 75% discount is available to business owners 65 years of age or older who meet other eligibility requirements. 

Florida

Business startup costs for Florida merchants range from $87.50 to just over $1,000, depending on business type. Florida doesn’t have the same business licensing requirements and processes as many other states, but it does require a seller’s permit or sales-and-use tax permit. 

Georgia

Georgia charges a non-refundable “investigation fee” of $100. Additional license fees apply to certain types of businesses. Breweries, distilleries, and wineries, for example, must pay an additional $1,000. Retailers and wholesalers may also be required to pay additional fees, ranging from $50 to $1,000. 

Hawaii

Hawaii requires merchants to get a general excise tax (GET) license to operate. This license has a one-time $20 fee.

Idaho

Most Idaho businesses don’t need to obtain a license, though some municipalities have their own licensing requirements. Idaho offers a Resource Wizard, which provides information on getting a business license.

Illinois

Illinois doesn’t issue general state business licenses, but some regulated professions require a professional license. There may be local city or county requirements, too. 

In Chicago, additional fees for specific industries may apply. Pop-up shops, for example, pay $25 for five days, $50 for 50 days, and up to $125 for a year. Businesses can check their local municipality or Small Business Development Center for more information.

Indiana

Indiana doesn’t require business licensing or registration. 

Iowa

Iowa license requirements vary based on whether the business is regulated by an Iowa authority or licensing board. Most retail businesses need a sales tax permit. Registering a trade name in Iowa usually costs less than $10. Businesses should check with their regional Small Business Development Center for assistance.

Kansas

Kansas-based businesses don’t need to pay a general business license fee to the state. Instead, licensing and fees are handled at the county and city levels.

Kentucky

Kentucky doesn’t have a statewide business license requirement. Certain types of businesses may need one or more special permits or licenses. 

Louisiana

Louisiana also doesn’t have a statewide business license requirement. However, many cities have their own licensing requirements and fees. In New Orleans, for example, fees range from $50 to $6,200 and are based on gross sales. 

Maine

Maine manages licenses and permits at the municipal level. In Portland, there’s a $45 business license application fee, and renewals cost $35 for the year. The licensing center on Maine’s Business Answers website outlines requirements and fees for each city. 

Maryland

Maryland doesn’t require a general business license. However, there are licensing and permit requirements depending on the type of business. 

If you use a warehouse to store inventory, for example, a storage warehouse license will cost $30 to $150 each year, depending on the population of your municipality. Chain store licenses cost $5 per store up to five stores; $20 per store for six to 10 stores; $100 per store for 11 to 20 stores; or $150 per store for more than 20 stores (in all counties except Cecil and Baltimore City).

Massachusetts

In Massachusetts, licensing and permits are based on industry. To find out if your business needs a license, check with the Division of Occupational Licensure.

Michigan

Business licensing in Michigan is heavily based on the type of business. Licensing fees vary widely.

Minnesota

Minnesota charges an initial filing fee of $30 to $220, depending on whether you apply by mail, in person, or online. Annual renewal fees also vary. Some cities and counties may require additional licenses and fees.

Mississippi

Mississippi charges a $50 initial filing fee for articles of incorporation for LLCs, plus a $25 annual report fee. However, there’s no official state-issued business license. 

Missouri

Business license fees in Missouri are based on how much authorized capital a business has. Costs range from $58 to $143.

Montana

The state of Montana doesn’t require a general license, although certain industries require licensing with the Department of Revenue. Most cities and counties impose their own rules regarding business licenses. 

The City of Bozeman, for example, requires all businesses to be licensed, and the application fee is $25 (or $150 for medical marijuana businesses). Check with your local county for specific requirements.

Nebraska

There isn’t a general license requirement in Nebraska, but certain businesses may have to file a license with the state. Some cities also require their own license, so business owners should reach out to their local government for instructions.

Nevada

Nevada requires all businesses to have and annually renew their state business license. The renewal fee is $500 for corporations and $200 for other business types. The fee and form are due on the last day of the anniversary month that the business license was originally filed, and are subject to a $100 late-filing fee. Additionally, Nevada requires businesses to obtain a local license with their city or county of operation.

New Hampshire

New Hampshire doesn’t require a general state business license but companies in certain industries must be licensed.

New Jersey

In New Jersey, all businesses must register for a license. For-profit businesses and foreign non-profit corporations pay $125, while domestic non-profit corporations owe a discounted fee of $75. 

New Mexico

New Mexico doesn’t have statewide business license stipulations. However, licensing may vary by city.

New York

While businesses don’t have to pay for a state license in New York, many must be licensed at the local level. In New York City, file a Business Certificate (also called a Certificate of Assumed Name) form at the county clerk’s office. Fees range from $100 to $150.

North Carolina

In North Carolina, it costs $125 to file Articles of Incorporation and $30 to reserve a corporate name. Other fees may also apply. 

North Dakota

North Dakota doesn’t issue state business licenses. However, some businesses may need to register based on industry, with fees ranging up to $5,000.

Ohio

Ohio doesn’t have general business license requirements but it does require persons or businesses making retail sales with “tangible personal property or taxable services” to register for a vendor’s license, which costs $25. The same $25 fee applies for transient vendors such as pop-ups. Additional licenses and fees may apply. 

Oklahoma

Oklahoma doesn’t require a state-issued business license, but there are licensing requirements for some industries.

Oregon

Like Oklahoma, there’s no state business license in Oregon, though some industries need to abide by certain parameters. Some cities and counties also require a license. 

Pennsylvania

Businesses in Pennsylvania must pay $125 to file Articles of Incorporation with the state. There’s also a $70 annual report fee.

Rhode Island

Initial filing fees in Rhode Island range from $150 to $230, depending on business structure. There’s also an annual $50 report fee ($60 for benefit corporations) and an annual $400 tax. 

South Carolina

South Carolina doesn’t require a statewide business license. Licenses, permits, and regulations are all administered locally. 

South Dakota

South Dakota doesn’t have a general business license fee, however, some businesses will need registrations or permits based on industry.

Tennessee

In Tennessee, businesses must register to pay tax. All new businesses must register and pay a $15 fee. In-state businesses need either a minimal activity license (more than $3,000 gross but less than $10,000) or a standard business license (more than $10,000 gross). 

Texas

Texas doesn’t have any general business licensing requirements or fees, but businesses in specific industries may require licensing.

Utah

Utah charges $59 for domestic articles of incorporation and $18 for annual filings. It also requires all businesses to obtain a license from their municipality, each with its own requirements.

Vermont

Vermont charges a one-time fee of $125 for filing articles of incorporation. Businesses also pay an annual report fee of $45. 

Virginia

Businesses in Virginia can register with Business One Stop for $20 but a business license isn’t required to perform business in the state.

Washington

Most businesses in Washington need to apply for a business license. Processing fees are up to $50.

West Virginia

West Virginia doesn’t require a general business license. Terms and requirements vary by business type.

Wisconsin

Wisconsin doesn’t require a statewide business license, but businesses need to register with the state to ensure they’re properly collecting and paying sales tax. This costs $20 for two years, and an annual $10 fee thereafter.

Wyoming

Wyoming doesn’t have a state-issued business license but requires businesses to pay an annual $25 registration fee. Filing articles of incorporation costs $100.

Make your business legitimate

Registering your business and getting the necessary licenses and permits is imperative to long-term success. Once you have those steps out of the way, you can get back to the fun parts of launching and growing your business.