What Business Licenses Do You Need to Start in the U.S.?

Starting your own business is exciting. 

But figuring out business licenses?

That is where most first-time owners get stuck. You don't need a law degree to get compliant. And you don't need to spend weeks digging through government websites either. 

What you do need is clarity. 

Why?

Because even one required license can affect your business. In fact, many small businesses face compliance issues simply because they didn't know what was required in their state or city. 

That is exactly why business formation services exist to: 

• Simplify the process
• Reduce guesswork 
  Help you get it right from the start 

The tricky part?

There is no single "business license." That's why we have created this guide. Inside, you will learn exactly what business licenses you need, how to identify them, and how to move forward with confidence. 

Let's break it down.  

5 Main Types of Business Licenses

1. General Business Licenses (Operating License)

A general business license is the most common starting point, but not every business will need the exact same one. 

In many places, it is issued by your city or county and gives you permission to legally operate there. 

The SBA notes that licensing rules vary by:

• Industry
• State 
• Location 

You should always check the local requirements where your business is based.

This is the first license to look into if you are opening a storefront, a service business, or even a home based business. 

2. Seller's Permit (Sales Tax License)

You may need to register for sales tax with your state if your business sells taxable products or services. 

In some states, this is called:

• Seller's permit
• Vendor's license
• Sales tax permit

For example, Ohio requires retailers and certain service providers who make taxable retail sales to obtain a vendor's license. 

This is important for:

• Retail
• Ecommerce
• Product based businesses

If you sell online, do not assume you are exempt just because you do not have a physical store. 

Sales tax rules are handled at the state level, so the exact requirements depends on where you operate and where you sell.

3. State or Industry Licenses

Some businesses need special licenses because of what they do. 

The SBA points out that requirements vary by industry, with examples including:

• Construction 
• Plumbing 
• Restaurants 
• Retail
• Farming 
• Dry cleaning 
• Vending machines 

This is not optional if your business is in a regulated field. You may need a state-issued license, certification, or permit before you can legally provide services or open to customers. 

The exact agency depends on your business type. The rule is simple: check your industry, then check your state requirements. 

4. Federal Licenses (Only For Certain Businesses)

Most small businesses do not need a federal license. 

The SBA states that federal licenses are required only when a business activity is regulated by a federal agency. 

This usually applies to specific industries, not everyday small businesses. If your business falls into a federally regulated category, you must go through the appropriate federal agency before you begin operating. 

For everyone else, this requirement can usually be crossed off the list.

5. Local Permits (Often Overlooked)

Local permits are one of the easiest things to miss, but they matter just as much as state requirements. 

The SBA explains that local governments determine:

• Registration 
• Licensing 
• Permitting requirements

The businesses must check local government websites to understand what is needed. 

These permits can include: 

• Zoning approvals
• Health permits 
• Sign permits 
• Home-based business permits 

If you are starting a business from home or using a physical location, local rules may affect: 

• What you can do
• Where you can operate 
• How you can advertise

The Bottom Line 

There is not one size fits all business license. What you need depends entirely on your setup.

To get it right, focus on three things: 

• Your state 
• Your city or county 
• Your business type and activities

You can identify what applies to you if you know the above-stated three things. You can even use a customized license report to get everything in one place that is clear, accurate, and ready to act on. 

That's it.