What’s one of the easiest ways to delay your business launch, or worse, get fined before you even open? Missing a required license or permit.
Starting a small shop, expanding to a new location, or growing into new markets all come with rules you can’t afford to ignore. Some licenses allow you to legally operate your business, while certain permits cover activities like construction, signage, or food service.
Missing either one can cost you time, money, and potential customers.
In this guide, we’ll break down the most common types of business licenses and permits, explain why they matter, and help you understand what’s required by state and local governments.
Always remember that knowing what you need (and when) can help you avoid setbacks and keep your business running smoothly from day one.
Are Business Licenses and Permits the Same?
It’s common to hear people use licenses and permits in the same sentence, but they aren’t the same thing. Both are important for setting up and running a business, yet they serve different purposes.
A business license gives you legal permission to operate within a city, county, or state. It’s your official registration; a way for local governments to track your business entity and make sure you’re following local laws.
Whether you’re a retail store, restaurant, or contractor, you’ll likely need a business license before you open your doors.
On the other hand, a permit is specific to certain activities, like construction, food handling, signage, or health and safety rules. Permits show that your business meets certain codes or standards.
So while both licenses and permits are essential, they aren’t interchangeable. You need a business license to operate, and you’ll need permits for particular actions tied to your work.
Knowing the difference and making sure your business entity has both when required can help you avoid delays, fines, or legal trouble.
Types of Business Licenses
No matter what kind of business you run, you’ll need the right licenses to operate legally. While some licenses apply to almost every company, others depend on your industry, location, or business activity.
The type of license you need often comes down to local laws, industry rules, and government agencies. Understanding your licensing requirements upfront saves you from headaches later in the licensing process.
Here are some of the most common types of business licenses:
General Business License
A general business license is the most common license required to conduct business legally within a city or county.
The local government typically issues it and applies to most businesses, whether you’re a sole proprietor, limited liability company, corporation, or partnership.
Even if you don’t have a physical storefront, like if you’re running a home-based business, you’ll likely need this license before you start operations.
The license lets local authorities know that you’re doing business in their area, and it helps them make sure your activities comply with zoning laws, tax rules, and local regulations.
In many cases, the license is tied to your business location, meaning you may need a separate license for each city or county where you operate.
Securing a general business license is often your first step when setting up a small business license, especially if you plan to open multiple locations or work in different jurisdictions.
DBA License (Doing Business As)
A DBA license, or “Doing Business As” license, lets you run your business under a name that’s different from your legal business name. It’s often used by sole proprietors, partnerships, or even corporations that want to market themselves with a unique name or brand.
For example, if you’re a sole proprietor named John Smith but want to operate as “Smith’s Custom Furniture,” you’ll need a DBA license.
Filing for a DBA is usually done at the city, county, or state level, depending on where your business is located. The process often involves checking to make sure the name isn’t already in use, filling out a simple form, and paying a fee.
In some areas, you may also need to publish a notice in a local newspaper to make the registration official.
Occupational Or Professional License
An occupational license or professional license is often required if you work in a regulated field such as law, medicine, accounting, real estate, construction, or cosmetology.
These licenses prove that you’ve met certain regulatory requirements set by the state, county, or professional board before you offer services to the public.
Whether you’re starting your own business or working under a larger company, you’ll need the proper license to legally operate in your industry. Failing to have the right license can lead to fines, business closure, or legal trouble.
Here are a few common examples of where you may need an occupational or professional license:
- Medical professionals must be licensed by a state medical board.
- Contractors often need state or local licensing, sometimes from the county health department for specific trades.
- Cosmetologists and barbers must be licensed through a state cosmetology board.
- Accountants may need certification and licensing to practice publicly.
The licensing process varies by state and industry but usually involves proving education, passing exams, and renewing your license regularly to stay compliant.
Sales Tax License
A sales tax license, often called a seller’s permit, gives you the authority to collect sales tax on taxable goods or services. If your business sells products like clothing, electronics, or even taxable services, most states require you to have this license before making sales.
For example, if you open a retail shop selling handmade furniture, you’ll need a sales tax license to charge your customers the correct tax and send those payments to the state.
Without it, you could face penalties or fines. This license connects your business to the state’s tax system and helps you stay compliant with local tax laws, whether you sell online, in a storefront, or both.
Liquor License
A liquor license is needed if your business plans to sell or serve alcohol. The type of license you need can depend on whether you’re selling beer, wine, or hard liquor, and whether it’s for on-site consumption or retail sales.
Federal Business License
A federal business license (or federal license) is only required for businesses that operate in industries regulated by federal agencies.
Unlike a general business license, which comes from your local government, this license is issued by a federal authority and applies when your business activities fall under national regulations.
Here are some common situations where a federal business license may be required:
- Selling firearms or ammunition — regulated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
- Operating interstate trucking or transportation services — regulated by the Federal Motor Carrier Safety Administration (FMCSA).
- Broadcasting on radio or television — regulated by the Federal Communications Commission (FCC).
- Running a business that handles alcohol production or import — regulated by the Alcohol and Tobacco Tax and Trade Bureau (TTB).
If your business falls into one of these categories, you’ll need to apply directly with the relevant federal agency. Always check both state and federal laws to make sure you’re fully compliant before you start operations.
Tobacco License
If your business sells tobacco products, you’ll need a tobacco license and may also need to comply with tobacco tax rules. The Alcohol and Trade Bureau often oversees these at the federal level, but states may have their own requirements, too.
Types of Business Permits
Business permits give you official permission to perform certain activities tied to your location, industry, or specific projects.
Unlike licenses, which cover the right to operate a business, permits focus on safety, zoning, health, and other local regulations. The type of permit you need often depends on what you’re doing.
Here are some of the most common business permits you may need to keep your operations compliant and running smoothly.
Building Permit
A building permit gives you approval to start construction, renovations, or major repairs on a commercial property. Local or state government agencies issue these permits to make sure projects meet safety codes, zoning rules, and structural standards.
If you plan to remodel a storefront, expand a space, or make structural changes, you’ll likely need a building permit before starting work. Most applications require detailed plans, reviews, and inspections to make sure everything meets local codes.
Understanding your permit requirements before you begin can help you avoid costly delays, fines, or stop-work orders. It can also protect your investment by ensuring your project passes inspections and meets all legal standards.
Check with your local city or state government office to confirm what’s needed for your project before starting any work.
Zoning Permit
A zoning permit confirms that your new business is allowed to operate at a specific location according to local zoning regulations.
Cities and counties divide land into zones such as commercial, residential, or industrial. These rules control where different types of businesses can open and operate.
You’ll need a zoning permit if you’re opening a store, changing how a property is used, or making updates that affect how the property functions. The goal is to make sure your business fits within the area’s intended use and doesn’t conflict with community plans.
Sign Permit
Most business owners don’t realize they need a sign permit before putting up a sign for their store.
But in many cities, local governments regulate the size, style, location, and even lighting of business signs. The goal is to maintain a certain look in public areas and prevent clutter or safety hazards.
A sign permit is required when installing a new sign or adding temporary signage like banners. Local officials review sign plans to make sure they meet design standards, zoning codes, and safety regulations.
Without the right permit, your sign could be removed, or you might face fines and delays. Getting a sign permit before installation helps protect your business and keeps you in good standing with local authorities.
Health Permit
A health permit is required for businesses that prepare, handle, or serve food, as well as for some personal care services. This permit makes sure your business meets sanitation and safety standards set by health agencies, usually at the local level.
Health inspections are often part of the process, and permits must be kept current to avoid fines or closures. You’ll typically apply through the county clerk’s office or directly with the health department in your area.
Here are common situations where a health department permit may be required:
- Restaurants and cafes preparing or serving food
- Grocery stores, bakeries, and food retailers
- Food trucks or catering businesses
- Salons, spas, or businesses offering personal care services
Failing to get a health department permit can result in penalties, forced closures, or damage to your business reputation.
Fire Permit
A fire permit is often required for businesses that deal with flammable materials, use certain equipment, or expect large groups of people on-site. It shows that your business meets fire safety regulations set by the local fire department.
This permit may also be needed if you’re making changes to a building’s layout, adding alarms, or installing sprinkler systems.
The goal of a fire permit is to make sure your business has proper safety measures in place to protect employees, customers, and the property itself. The local fire department typically reviews your space, checks emergency exits, verifies equipment, and confirms that everything follows local codes.
Environmental Permit
An environmental permit is required for businesses that may affect air, water, or soil quality. These permits make sure companies follow environmental laws and limit their impact on the surrounding area.
The requirements often come from state or federal agencies and vary based on the type of business and its operations. You’ll need to check the rules in your area before starting activities that could trigger these regulations.
Common businesses that may need an environmental permit include:
- Manufacturers that release emissions or use hazardous materials
- Construction companies disturbing land or working near water sources
- Waste disposal or recycling businesses
- Gas stations and businesses handling fuel or chemicals
- Agricultural operations using fertilizers or pesticides
Occupancy Permit (or Certificate of Occupancy)
An occupancy permit, often called a certificate of occupancy, is required before a business can officially open its doors to the public. This permit confirms that the building is safe to use, meets building codes, and is suitable for your intended business activity.
Local authorities typically issue this permit after final inspections on construction, electrical work, fire safety, and other key areas. You’ll need it whether you’re opening a brand-new location, moving into an existing space, or changing how a property is used.
Without a certificate of occupancy, you may not be allowed to open your business to the public or secure insurance for your location.
Alcohol Permit
An alcohol permit is often required alongside or in addition to a liquor license, depending on the state and local laws.
While a liquor license grants your business the right to sell or serve alcohol, the alcohol permit usually covers specific activities related to storage, handling, or special events involving alcohol.
For example, you may need an alcohol permit for temporary events like festivals, tastings, or catered functions, even if you already hold a liquor license. Some jurisdictions also require separate permits for alcohol storage or distribution.
Special Event Permit
A special event permit is needed when your business hosts activities that fall outside of regular operations, such as promotions, festivals, or pop-up markets.
These permits help local authorities manage public safety, traffic, and noise related to temporary events, especially those held in public spaces or that draw large crowds.
The application process usually requires you to submit event details, site plans, estimated attendance, and any requests for road closures, signage, or extra security. Some jurisdictions may also ask for proof of insurance or coordination with public services.
Examples of special events that may require a permit include:
- Grand openings
- Sidewalk sales or outdoor markets
- Pop-up shops or temporary retail events
- Festivals or community fairs
- Outdoor concerts or live entertainment
Sales Tax Permit
A sales tax permit, sometimes called a seller’s permit or tax registration certificate, allows a business to collect and pay sales tax on taxable goods or services. Issued by state agencies, this permit connects your business to the state’s tax system.
While a sales tax license is a general term that may refer to your authority to sell taxable items, the sales tax permit is the specific document that lets you collect sales tax from customers and remit it to the state. You need this even if you already have a business license.
You’ll typically need to provide details like your federal tax identification number (also called an EIN) when applying. Though collecting sales tax is a state-level requirement, you still need to follow federal regulations for tax reporting and compliance.
In short, the sales tax permit gives you permission to collect tax, while the business license gives you permission to operate. Both are critical to staying compliant with tax laws and state business rules.
Home Occupation Permit
A home occupation permit allows you to legally run a business from your home. Many cities and counties have rules that limit how home-based businesses operate, especially when it comes to signage, customer visits, parking, or noise.
Common businesses that may need a home occupation permit include online shops, consulting services, tutoring, or craft businesses. Even if your work doesn’t bring customers to your home, local regulations may still require you to get this permit.
Make Permits And Licenses One Less Thing To Worry About
Keeping up with the rules from state and local governments shouldn’t hold your business back. Yet, that’s exactly what happens when permits or licenses get missed, delayed, or denied.
From business registration and zoning to health, construction, and signage permits, every step needs attention, and that takes time most business owners don’t have.
Permit Place is here to help you cut through the red tape by managing permits and licenses for your business, no matter your business structure or location. We work directly with state and local governments to keep your projects moving and help you avoid costly setbacks.
If you want less guessing and fewer surprises, we’ll help you handle the paperwork. Get a quote here.
FAQs About Types of Business Licenses and Permits
What license is best for a small business?
The most common license for a small business is a general business license issued by the city or county where you operate. It gives you permission to legally run your business in that area. Depending on your industry, you may also need specific permits or additional licenses.
What is the difference between a business license and a permit?
A business license gives you the right to operate your business, while a permit allows you to perform certain activities, like construction or food service. A license registers your business with local or federal government agencies, and a permit ensures you meet safety, health, or zoning rules.
What is the most basic business license?
The general business license is the most basic license most businesses need. It’s often the first legal document you’ll obtain and may be required before opening a business bank account or starting operations. In many cases, you’ll also need an employer identification number (EIN) when applying for this license, especially if your business hires employees or operates as a corporation or LLC.
Do I need federal permits for my business?
You may need federal permits if your business works in regulated industries such as firearms, alcohol, transportation, or broadcasting. If not, state or local licenses are usually enough.
How much does a business license cost?
Business license cost varies by state, city, and business type. Some cost as little as $50, while others may be several hundred dollars. Renewal fees may also apply, depending on your location.