Business licenses are one of the most essential things needed to open a small business. They serve as a way for you to operate your business while adhering to industry standards.

Business licenses may involve multiple jurisdictions, but there are some ways to make the process easier. Here’s a small business guide to business licenses.

What are Business Licenses?

Business licenses allow the recipient to conduct business in what the license grants. Cities, counties, and municipalities issue business licenses, and you’ll need one for any business entity. 

Licenses allow small businesses to operate, provide, and use certain products. There are two business license types: federal and state licenses.

Both new businesses and businesses expanding to new areas may need a business license.

What Licenses Are Needed to Start a Business?

You’ll need to start a business with at least two licenses: a general operating license and an industry license. 

A general license will register your business with your city or county. Not all cities or counties require business licenses for small business owners to operate their businesses. 

Specific industries issue industry licenses that cities, counties, and states may require. As with general licenses, not every city or county requires small businesses to have these licenses. 

A third license you may need is a sales tax permit. This is a requirement for states that collect sales tax. The permit allows small businesses to charge and collect sales tax, which it will then use to pay the state.

Depending on your small business, you may need a professional license. Every state has specific personal services industries that have a licensing qualification. To receive a professional license from the state, you’ll take a test to obtain licensing.

Specific fields require a state license so that you can operate your business. Some fields include:

  • Accounting 
  • Architecture 
  • Dentistry
  • Engineering
  • Law
  • Medicine 
  • Nursing
  • Pharmacy 
  • Psychology 
  • Teaching
  • Veterinary medicine

Small Business Licenses by Industry

If you start a small business in specific industries, you’ll need a federal business license. You’ll contact a particular federal agency to receive a business license from them.

Agriculture

If your small business imports or transports animal products, animals, biologics, biotechnology, or plants across state lines, you’ll need a federal license. 

You’ll work with the U.S. Department of Agriculture to get an agriculture license.

Alcohol

If your business imports, manufactures, or sells alcohol or alcoholic beverages, you’ll need a federal license. You’ll also need a federal license for alcohol if your small business produces alcohol for wholesale.

You’ll work with the Alcohol and Tobacco Tax and Trade Bureau or the Local Alcohol Beverage Control Board to get an alcohol license.

Aviation

If your business uses aircraft for operation, transports people or products by air, or conducts aircraft maintenance, you’ll need a federal license. 

You’ll work with Federal Aviation to get an aviation license.

Firearms and Ammunition

If your business deals, imports, or manufactures ammunition, explosives, or firearms, you’ll need a federal license.

You’ll work with the Bureau of Alcohol, Tobacco, Firearms, and Explosives to get firearms and ammunition licenses.

Fish and Wildlife

If your business works in wildlife-related activities, you’ll need a federal license. You’ll also need a federal license if your business exports or imports wildlife products.

You’ll work with the U.S. Fish and Wildlife Service to get a fish and wildlife license.

Commercial Fisheries

If your business works in commercial fishing, you’ll need a federal license.

You’ll work with the National Oceanic and Atmospheric Administration Fisheries Service to get a commercial fisheries license.

Maritime

If your business facilitates cargo shipments by sea or provides ocean transportation, you’ll need a federal license. 

You’ll work with the Federal Maritime Commission to get a maritime license.

Mining and Drilling

If your business drills for natural gas, oil, or other mineral resources on federal lands, you’ll need a federal license. This also applies if your business will use federal lands for mining.

You’ll work with the Bureau of Safety and Environmental Enforcement to get a mining and drilling license.

Nuclear Energy

If your business produces nuclear energy, is a fuel cycle facility, or is involved in the disposal or distribution of nuclear materials, you’ll need a federal license.

You’ll work with the U.S. Nuclear Regulatory Commission to get a nuclear energy license.

Radio and Television

If your business broadcasts information by cable, radio, satellite, television, or wire, you’ll need a federal license.

You’ll work with the Federal Communications Commission to get a radio and television broadcasting license.

Transportation

If your small business involves oversize or overweight vehicles, you’ll need a state permit. While the federal government doesn’t issue these permits, you can work with a government department to facilitate the process.

You’ll work with the U.S. Department of Transportation to get a transportation permit.

State Licenses

Many states issue state business licenses to small business owners. To get one, you’ll likely work with your state’s Secretary of State, but the process may differ depending on your location. 

There may be fees to obtain your business license, such as an application fee. These fees will also vary because of your business location or entity type. 

You’ll also want to know that some state business licenses and permits expire after some time. There are also fees you’ll pay to renew your license, and you may have to renew your state business license annually.

State permits are an option for businesses working in the transportation of oversize or overweight vehicles. The federal government doesn’t oversee this, and it doesn’t issue permits for these vehicle types.

Let Us Help You With Your Small Business Needs

Small business licenses are an essential part of business operations. There are multiple jurisdictions, overlapping rules, and professional licenses with their own rules and regulations to consider.

While this may be stressful if you’re creating or expanding a small business, it’s critical to get the help you need at any stage of your small business. Work with 1-800Accountant for help with your licensing needs as you launch your new business. 

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Written by Brendon Pack

Brendon Pack is Chief Revenue Officer (CRO) at 1-800Accountant, the nation's leading accounting firm for small business. Brendon has worked ...