3 Critical Reasons You Need a Business License

4 min read · 2 years ago


If you’re planning on starting a business, you’ll need to know more than just the type of business entity you should choose. You should also inform yourself on designating a registered agent and, as we discuss below, the importance of a
business license—a government-issued document that permits you to operate your business within a specified geography. Exact requirements for a business license or permit tend to be localized, meaning they will vary based on your state, city, and county.

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1. The federal government may regulate your business activities

Some business activities are regulated by federal agencies. Each agency has their own purview, of course, and your business may require multiple licenses or business permits depending on the products and services you provide. For instance, the Federal Communications Commission governs information that’s broadcast over radio, television, cable, and other public channels.

The SBA provides several examples of business activities and the corresponding agencies that handle related licensure:

  • If your business focuses on aviation, such as operating or maintaining aircraft, or transporting goods or people via air, then you’ll be dealing with the Federal Aviation Administration.
  • If your business deals with wildlife-related activities, such as the import or export of wildlife, you’ll need to engage with the U.S. Fish and Wildlife Service.
  • If your business is in mining and drilling, such as drilling for natural gas or oil on federal lands, then the Bureau of Safety and Environmental Enforcement is the agency you should contact.

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2. Your state may require licensure

Compared to the federal government, state regulations for business activities tend to be broader in nature—for example, construction, farming, restaurants, and retail. State business licensure can include, but is not limited to:

Standard state business license

Assuming the state issues a standard state business license—as not every state does—it is required regardless of the type of business you have. For example, Alaska and Delaware issue this type of business license, meaning business incorporation in these states requires you to obtain these licenses before conducting business. However, California and Texas do not issue this type of license, so you are not required to obtain one.

Business-specific state business license

Similar to the standard business license, states may also issue a business license that only specific businesses are required to have. For example, Minnesota requires childcare centers to be licensed by the Department of Human Services.

Professional license

Also called an occupational license, a professional license is tied to certain professional fields such as medicine, law, accounting, psychology, engineering, and teaching. You often must have this type of license before practicing a given profession, though how the license is regulated varies by state. Also, keep in mind that obtaining the license or permit isn’t the end. Some licenses expire periodically, meaning you must renew them to continue operations. While this may be as simple as filling out a form and paying a fee, some renewals require additional steps.

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3. Your city or county may require multiple business permits.

One of the biggest permit-based areas local governments control is zoning—municipal or local laws that dictate how real estate or land can and cannot be used in specified areas. Zoning classifications such as industrial versus commercial, can impact what type of businesses can operate in certain areas of the city.

While zoning may have minimal impact on an online business, it’s a significant consideration if you plan to have a physical location. The SBA notes that zoning ordinances can “restrict or entirely ban specific kinds of businesses from operating in an area.” For zoning information specific to your local area, check with your local zoning office, city hall, department of city planning, or similar office.

Similar to zoning, building permits are another focus for local governments. If you’re planning on building a new office or factory, you’ll also need to obtain appropriate building permits to ensure the structure conforms to requisite safety codes and other regulations. A licensed contractor will be helpful in this area since they should be aware of the building permits needed for your construction project.

Beyond zoning and building permits, local governments also regulate a number of other areas:

  • Fire department permits
  • Health licenses and permits
  • Signage permits
  • Environmental licenses and permits

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Starting a business is a big step. Don’t let the daunting task of business incorporation stop you from moving forward. Choose the right business entity and get all your paperwork handled for you with Business Maker’s Legal Package—it gives you the legal help you need to quickly transform your business vision into reality. In partnership with Legalinc, Legal Package files all the paperwork needed to form a business entity and even generates a full business license report. All you have to do is fill out a questionnaire—it takes less than 15 minutes.

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