Business License

What is a business license?

Just because a business has formally launched doesn’t necessarily mean that it can legally operate. Most entities—even sole proprietorships and partnerships—and some professionals must obtain the required business and professional licenses to be able to conduct business or provide services. Almost every business needs at least one license to operate legally. A business license grants permission to operate legally and provides proof that certain local, state, or federal government regulations (like health codes) are met.

There are many types of business licenses that may be required. It all depends on the business’ or professional’s industry and the location and the nature of the business. For example, there are federal business licenses for moving agricultural products across state lines, statewide business licenses for practicing medicine, and general business licenses simply to be able to operate in a local county or city. 

Here are some other instances in which a business license is likely required: 

• Restaurants that want to sell alcoholic beverages will need to apply for a liquor license.
• Businesses operating in the retail sector that collect sales tax may need to apply for a state sales tax license, sometimes called a seller’s permit, to obtain their tax registration certificate. 
• An online business operating from home may need a home occupation permit.

Navigate the business formation process with confidence by pinpointing which business licenses you need to stay in local, state, or federal compliance. LegalZoom's Business License Report and Management service simplifies the business licensing processes and helps you find any licenses your business might need. We offer custom reports, direct application links, and renewal reminders.

FAQs 

How long do business licenses last?

The term of a business license depends on the type of license, the industry or business activities, and the issuing agency or jurisdiction. Generally, most business licenses expire after one year, but some may not need to be renewed for two or more years.

How much does a business license cost?

Business license costs vary wildly across industry and type of license. For example, a local general business license will likely cost less than an industry-specific license, like a medical license. To learn how much a specific business license is, contact the issuing government agencies or licensing organization.

What happens if you do business without a business license?

Businesses operating without the required business licenses can incur fines, legal action, tax penalties, or even the closure of the company. Running a business requires researching what local, state, and/or federal licenses are required so that you’re compliant with all licensing requirements and regulations. A business might need multiple licenses to operate. 

What license is best for small business?

Small businesses, just like large corporations, must obtain the required licenses to be able to conduct business. So, there isn’t a license that is “best”; rather, the types of licenses and permits for a small business to get are those that a local jurisdiction and state or federal agency require.