How to Get a Business License: Requirements & Compliance

Starting a business comes with a long list of decisions, but there are a few tasks that are absolutely necessary; one of those is securing the legal right to operate said business. For most businesses in the U.S., that means obtaining the right business licenses and permits before you can open your doors. 

However, requirements vary much more than most first-time owners expect. What you need depends entirely on three main factors:

• Where you operate (your state, county, and city)

• What your business does (your industry and activities)

• How it's structured (LLC, corporation, or sole proprietorship)

Where you operate, what your business does, and how it's structured all influence what you need. This guide walks you through what a business license is, how it differs from an EIN or DBA opens in a new tab, what the application process looks like, and how to stay compliant as your business grows.

Key takeaways

• Most businesses need at least one license or permit before legally operating, even if requirements vary by location and industry.

• Business licenses, EINs, DBAs, and entity registration all serve different legal and operational purposes within the business formation process.

• Many businesses need approvals from multiple government levels—city, county, state, and occasionally federal agencies.

• Licensing costs, application requirements, and approval timelines can vary significantly depending on the type of business you're opening.

What is a business license, and who needs one?

A business license is official approval from a government agency to run your business legally within a specific jurisdiction. It proves that your business is registered, pays local taxes, and follows public safety standards and industry-specific requirements.

It's also worth clarifying what a business license is not. 

An LLC opens in a new tab, an EIN opens in a new tab, and a DBA opens in a new tab each serve a distinct purpose in the business formation process, but none of them substitutes for the licenses and permits that authorize you to actually operate. Many businesses will need all of them.

Licensing requirements exist at multiple levels of government:

• City level: Many municipalities require a basic operating license before a business can open.

• County level: Some counties have their own licensing requirements that sit alongside city rules.

• State level: Depending on your industry or business structure, your state may require registration or specific permits.

• Federal level: A smaller number of industries, such as aviation, firearms, or alcohol production, require federal licensing or oversight.

The businesses that most commonly require licenses include retail stores, restaurants, contractors, healthcare providers, and online sellers.

Types of business licenses

Not all business licenses are the same, and many require more than one. The type you need depends on your industry, location, and the nature of your business activities. Understanding the main categories upfront makes it easier to identify what applies to you before starting the application process.

It's also worth noting that licenses and permits are often used interchangeably, but they're not always the same thing. 

A license typically grants ongoing authorization to operate, while a permit is usually issued for a specific activity, location, or time period. In practice, you may need both.

The categories above cover the most common licensing requirements. That said, regulated industries like healthcare, childcare, food service, and construction often require additional permits or inspections on top of a standard operating license. We'll cover those in more detail in the requirements section below.

What are the requirements for a business license?

There is no single, universal business license requirement in the U.S. What you need depends on a combination of factors: where your business is located, what it does, how it's structured, and whether it has employees, a physical premises, or taxable sales.

The following sections break down the most common requirement categories, so you can identify which ones are likely to apply to your business.

General business licenses

Many cities and counties require businesses to obtain a standard operating license before opening, sometimes called a business tax certificate or municipal license. Some states also require statewide registration or a general operating license on top of local requirements. Checking with your city or county clerk's office is usually the right starting point.

Professional and occupational licenses

Regulated professions require specialized licensing through state boards or agencies. This applies to a wide range of occupations—electricians, accountants, real estate agents, cosmetologists, and healthcare professionals, among them. Requirements vary by state, and some professions require ongoing continuing education or periodic recertification to remain licensed.

Sales tax permits

Businesses selling taxable goods or services typically need a seller's permit or sales tax license before making their first sale. For e-commerce businesses operating across multiple states, sales tax nexus rules add another layer of complexity—selling into a state above a certain revenue or transaction threshold can trigger registration and collection obligations in that state.

Federal licenses and permits

Most small businesses won't need federal licensing, but certain industries are subject to federal oversight regardless of where they operate. These include aviation, firearms dealers, alcohol production, interstate transportation, and broadcasting. If your business falls into one of these categories, federal authorization is required in addition to (not instead of) state and local licenses.

How to get a business license

Getting licensed isn't a single transaction but a process that varies depending on your business type, location, and industry. Most businesses will need to coordinate with more than one agency before they're fully authorized to operate, so working through the steps in order keeps things moving without unnecessary back-and-forth.

Research your requirements first

Before filing anything, you need to know what applies to you. Your state's office (typically the Secretary of State website) is the best starting point for understanding entity registration and state-level licensing obligations. From there, check your city and county clerk's office for local requirements. If your profession is regulated, identify the relevant state licensing board early, as those applications often run on separate timelines from general business licenses.

Register your business structure

If you haven't already formalized your business structure, this comes before any license application. Some jurisdictions won't process a license application without proof of entity registration, so an LLC, corporation, or partnership needs to be on file with the state first. Sole proprietors operating under their own name may be able to skip this step, but those using a trade name will typically need to file a DBA before applying.

Obtain an EIN

Most businesses will need a federal Employer Identification Number before completing license applications—even those without employees. An EIN is issued by the IRS, the application is free, and in most cases, approval through the online account system is immediate. Have it ready before you start filing, as most applications will ask for it.

Complete and submit your applications

Most applications ask for the same core information:

• Business name and trading address

• Ownership details and business structure

• EIN and entity registration documentation

• Any industry-specific certifications or inspection records that apply

Many jurisdictions now offer online filing through a state or local portal, which tends to be the fastest route. Others still require paper applications or in-person submission—your clerk's office or licensing board website will confirm which applies. Having your documents organized before you start keeps the registration process clean.

Pay license fees and factor in approval timelines

Licensing fees vary considerably by location and license type—from nominal amounts for a basic municipal license to several hundred dollars for regulated industry permits. Approval timelines follow the same pattern: straightforward local licenses can clear within days, while applications requiring inspections, zoning review, or board approval can take several weeks. Build that buffer into your launch plan rather than assuming fast turnaround.

What is an EIN number?

An Employer Identification Number (EIN) is a federal tax ID issued by the IRS that identifies your business for tax, banking, and compliance purposes. Think of it as a Social Security Number for your business, a unique identifier that follows the entity rather than the individual behind it.

An EIN is often confused with a business license. An EIN is a federal tax identifier that tells the IRS who your business is, while a business license is a legal authorization from your city, county, or state to operate. Most businesses need both, and neither replaces the other.

An EIN doesn’t authorize you to operate or serve as proof of state-level registration. It’s one piece of the formation process, not the complete setup.

When businesses need an EIN

Most businesses will need an EIN at some point during setup, and many will need one before they can complete other formation steps. Common situations that trigger the requirement include:

• Hiring employees: An EIN is required before putting anyone on payroll

• Opening a business bank account: Most banks won't open a business account without one

• Filing business taxes: LLCs, corporations, and partnerships all file under their EIN rather than a personal Social Security Number

• Forming an LLC or corporation: Many states require an EIN as part of the registration process

Sole proprietors without employees may be able to operate using their Social Security Number, but obtaining an EIN is still worth considering because it keeps personal and business finances cleanly separated from day one.

How to apply for an EIN

EINs are issued directly by the IRS at no cost. The online application is straightforward and, in most cases, returns your EIN immediately upon completion. Applying doesn't replace any licensing or permit requirements, but adds a necessary piece of your compliance infrastructure before those applications begin.

What is a DBA?

DBA stands for "Doing Business As", and is a registered trade name used when a business operates under a name different from its legal entity name. It's a branding and administrative tool rather than a legal structure, and it doesn't create a separate legal entity or offer any liability protection.

A sole proprietor named Sarah Johnson who operates as "Bright Space Interiors," for example, would need to register that name as a DBA before using it on contracts, invoices, or marketing materials. The business is still legally Sarah Johnson; the DBA simply makes the trading name official.

What types of businesses typically use a DBA?

DBAs are most commonly used by:

• Sole proprietors: Operating under any name other than their own legal name requires a DBA in most jurisdictions

• Partnerships: Similar to sole proprietors, partnerships operating under a trade name rather than the partners' legal names typically need to register it

LLCs expanding into new verticals: A business with an existing LLC that wants to operate a second brand or product line under a different name can use a DBA rather than forming an entirely new entity

 How DBA registration works

Registration requirements vary by state and local jurisdiction. Some require county-level filing, others handle it at the state level, and certain jurisdictions require public notice publication in a local newspaper as part of the process. Fees typically range from $10 to $100, depending on location, and approval is usually straightforward once the name has been confirmed as available.

It's worth checking early whether your intended trading name is already in use, as a name conflict will require you to refile with an alternative.

DBA vs. LLC vs. business license

These three are distinct but frequently conflated, particularly by first-time business owners working through formation for the first time:

Depending on how your business is structured and what it does, you may need all three—and none of them substitutes for the others.

How much does a business license cost?

There's no single figure that applies across the board—a home-based freelancer and a licensed contractor in the same city could face very different fee structures before they're authorized to operate. Most businesses will encounter two types of costs: initial application fees and ongoing renewal expenses.

Figures are indicative. Actual fees vary by jurisdiction and license type.

Common licensing costs

For most small businesses, the initial outlay covers a general business license and, where applicable, a seller's permit, DBA filing, and any industry-specific certifications. Professional licenses tend to carry the highest upfront costs, particularly in healthcare, construction, and financial services, where exam and training fees can add to the application cost itself.

Renewal and ongoing compliance costs

Most licenses require periodic renewal (typically annual or biennial), and renewal fees generally mirror initial application costs. Some industries add further recurring expenses: inspections, continuing education, or updated certifications that must be maintained to keep a license active. Building these into your annual budget from the start avoids surprises later.

How long does it take to get a business license?

Timelines vary considerably depending on the license type, jurisdiction, and whether any inspections or board approvals are required. As a general guide:

Building realistic timelines into your launch plan, rather than assuming fast approval, is one of the simplest ways to avoid a delayed opening.

Business license checklist

The steps below follow the order most businesses should work through before opening. Some items will be straightforward, whereas others, like industry-specific permits or zoning approvals, may require more lead time than expected. Working through them in sequence, rather than in parallel, reduces the risk of having to refile or restart steps because a prerequisite wasn't in place.

A few things worth confirming before you start: that your business structure is decided, that you know which government levels you need to engage, and that you've set aside realistic timelines for any permits that require inspection or board approval. The checklist below covers each stage in order:

• Choose a business structure

• Register the business entity with your state if required

• Apply for an EIN through the IRS

• Register a DBA if operating under a trade name

• Research state and local licensing requirements

• Apply for any industry-specific permits

• Confirm zoning or home occupation rules if working from home

• Budget for application and renewal fees

• Track renewal deadlines and ongoing compliance requirements

Licensing is the start, not the finish line

Getting licensed is one of the first concrete steps toward operating a legitimate, protected business, but it's rarely a one-time task. Requirements can shift as your business grows, adds employees, expands into new markets, or takes on new services. Checking in with your state and local agencies periodically, rather than only at launch, keeps you ahead of compliance gaps before they become problems.

Starting a business also means managing a significant volume of documentation, from formation paperwork and vendor agreements to signing agreements and more. See how Docusign helps small business owners sign, send, and organize legally binding agreements from day one.

FAQs

Do sole proprietors need a business license?

In many cases, yes. Licensing requirements are based on business activity and location, not business structure, so sole proprietors may still need a local operating license, seller's permit, or industry-specific permit depending on what they do and where they operate.

Can I operate in multiple states with one business license?

No. Business licenses are jurisdiction-specific, which means operating in a new state typically requires separate registration and licensing in that state. E-commerce businesses should also be aware that selling into multiple states above certain revenue thresholds can trigger sales tax obligations in those states.

What happens if I operate without a business license?

Operating without the required licenses can result in fines, forced closure, or difficulty enforcing contracts, since unlicensed businesses may face legal complications when disputes arise. Some industries also carry personal liability exposure for operating without proper authorization.