Business License Basics

By Shannon C , last updated July 13, 2011

For most business owners, obtaining a business license and in some cases business permits, will be required before business operations can commence. The best place to find out information about which business licenses and/or permits may be required in your geographic area is to contact the local county or city clerk's office to inquire. Since requirements for applying for a business license can vary greatly even between cities or counties, this is the only sure method of finding out what the requirements in your geographic area are. The city or county clerk's office will have the forms you will need to fill out in order to successfully apply for a business license, and will also be able to answer any questions you may have while you are completing the forms. Learn more about business license basics and ensure that your business has the required licenses for doing business in your area of interest.

Levels of Business Licenses

There are three governmental entities which may require your business to obtain licensure prior to operation. Some types of business will need to obtain all three levels of licensure, while others may need only two or just one type. The three types of licenses which may be required are federal, state, and local, which includes city or county, and possibly municipal licenses. Only certain types of businesses, such as broadcasting, investment firms, and sales of tobacco or firearms may require federal licensure. Other types of businesses, such as cosmetologists and barbers, accounting firms, and contractors may also need state licensure, and most types of businesses will need only local licensure to operate.

How to Obtain a Business License

The first step you will want to take is to contact your local county or city clerk's office, inform them of the type of business you wish to operate and the geographic location of the business, and ask for information about which forms you need to fill out to obtain a business license. You may be required to apply for zoning licensure, a license to remodel a business, a license to operate a home-based business, and other licenses.

Steps to Take Before Obtaining a Business License

It is always a good idea to research all of the licenses you will be required to obtain and maintain before you purchase an existing business or start a new business so you are aware of possible limitations, applicable fees, and other requirements that may otherwise inhibit your operations. While typically fees for local business licensure will be reasonable, fees for state or federal licensure can be more costly. You will also need to obtain your DBA, or doing business as, registration, which outlines the legal name under which your business entity will operate, elect your business structure, which can vary from a sole proprietorship to a corporation, and obtain your employee identification number (EIN), before you apply for a business license. You may also need to apply for what is called a seller's permit, which gives your business authorization to collect sales tax from your customers, before applying for a business license.

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