What Is Business Licensing?

Business licensing is the practice by the government of issuing specific licenses and permits in order for a business to operate legally. Your new business may need different licenses or permits at start up, or you may need only a general type of license.

Basics

Business licenses and permits are obtained from local and state governments. The number and type of licenses and permits you need for your business depend on what kind of business you're starting and local, state, and federal laws. You may need nothing more than an operating license in order to start your business while others may need different licenses and permits from several agencies.

Federal Licenses

Most licenses and permits are issued by the local and state levels of government, but there are a few industries that require federal licenses and permits. These industries are those that are overseen by a federal agency such as the United States Department of Agriculture or the Food and Drug Administration. Some industries may also need licenses issued by the Environmental Protection Agency.

Find Licenses You Need

There are several ways to find out what licenses you need. One way is to check with any professional organizations you belong to. This will be most helpful with federal or state licenses. Contact your city or county chamber of commerce to find out what local and state laws are. The chamber of commerce will also be helpful for general information about starting your business. Also check out the Register, Licenses, and Permits section on Business.gov. A tool at that site will help you find what licenses and permits you need. Be wary though; this tool may not always be updated.

After Obtaining the License/Permit

Keep track of your licenses, and also copies of all paperwork you had to file in order to get the licenses and permits. You also need to find out what your local and state laws require regarding the posting of licenses and permits. They will probably need to be placed where clients can easily view them.

Beyond Start-Up

Your initial licenses and permits are probably not the last you will have to deal with. Some licenses will need to be renewed, and this is something you need to find out when applying for the licenses. You also may have to apply for more licenses if you start another business, offer new products or services, or expand into other areas.