A long to-do list can be intimidating when starting a new business. There are so many things you need to take care of to get up and running. And while many of these steps may be tedious, they can have a significant impact on your business—and your ability to stay in business.
In some areas, you’re required to have a business license to operate legally. But that’s not always the case. In this post, we take a look at how to know if you need a business license and what you need to do to get one to make sure your next venture is totally legit.
Get your business licensed
Where to get a business license
When you register your business and obtain the necessary licenses and permits, there are multiple jurisdictions to consider: federal, state, and even local.
Only certain industries need a federal business license. Those licenses are issued by different federal agencies:
- Radio and television broadcasting: Federal Communications Commission
- Transportation and logistics: US Department of Transportation
- Alcohol: Alcohol and Tobacco Tax and Trade Bureau and Local Alcohol Beverage Control Board
- Agriculture: US Department of Agriculture
- Aviation: Federal Aviation Administration
- Firearms, ammunition, and explosives: Bureau of Alcohol, Tobacco, Firearms, and Explosives
- Fish and wildlife: US Fish and Wildlife Service
- Commercial fisheries: National Oceanic and Atmospheric Administration Fisheries Service
- Maritime transportation: Federal Maritime Commission
- Mining and drilling: Bureau of Safety and Environmental Enforcement
- Nuclear energy: US Nuclear Regulatory Commission
On a state and local level, the process is different for each jurisdiction. Generally speaking, you’ll need to gather your business and personal information, fill out required forms, and pay associated fees. It’s always best to check directly with your local agencies.
What you need to get a business license
The federal government only requires a business license for businesses operating in certain industries. All businesses, however, can get a federal tax ID, or Employer Identification Number (EIN), for free online at IRS.gov.
To get your state business license, you need the following:
- Owner name and contact information
- Business name and contact information
- Any required permits
- Any required forms or paperwork
- Associated fees (outlined below)
Each state has its own process and requirements for business licenses, and it varies greatly. It’s always best to check directly with your local jurisdictions to determine what you need to get your business license.
How to get a business license
To get a business license, you’ll first want to file for your EIN to make the process easier. This also creates a distinct separation between your business and yourself as an owner.
Businesses operating in certain industries must acquire a federal business license, as well as any required by their local jurisdictions. Businesses in qualifying industries need to contact a corresponding federal agency.
Once you have your federal licensing squared away, check with your state and municipality to find out the steps to take for your state licensing. While each location has its own process and requirements, the general process involves gathering your personal and business information, paying any fees, filling out any forms, acquiring permits, and submitting it all to the necessary parties.
How much is a business license?
There are no fees if you don’t need a federal business license. If you do, fees vary by industry and are paid to the issuing federal agency. State license and permit fees can range from free to as much as $5,000. Costs vary by state and business activity.
Alabama requires three separate business licenses, each of which are non-refundable (except in the case of duplicates):
- Business Privilege License
- Store License
- Municipal Business License(s) from your local jurisdiction(s): maximum $12
In Madison County, a business license costs anywhere from $37 to $77, while Mobile County businesses pay $130 for their first year and 50% of that each year after.
Late renewals accrue a 15% penalty plus interest. You can also transfer business licenses for a $1 fee.
A business license in Alaska is $50/year for new and renewal licenses. Licenses expire on December 31 each year, except in the case of licenses issued after October 1. A license issued after October 1 will be valid for the remainder of the year as well as the following calendar year.
In Arizona, sellers must get a transaction privilege tax (TPT) and business license through the state’s License Compliance Program. TPT license fees vary per location jurisdiction, ranging from $1 to $50 annually.
In Arkansas, fees range from $50 to $1,000 per year, depending on the type of business. While not all businesses require a state license, there may be additional local requirements—check out Alaska’s Small Business Development Center for more information.
California doesn’t require all businesses to have a license at the state level, but certain counties and cities do. Some industries are state regulated and require a license from a corresponding board or division. Check the CalGold permit assistance tool to find specific license requirements and fees.
Only certain businesses in Colorado require a license—the cost of a license for state-regulated businesses varies by industry. There may be additional license requirements depending on where the business is located, so check with your local municipality.
A business license in Aurora, for instance, is valid for two years and costs $26 plus a $17 application fee. In Fort Collins, any home-based or entrepreneurial business must also register as a home business, which costs $25 and is valid for two years.
In Connecticut, fees are based on the type of business. Charitable solicitations, for example, don’t need to pay an initial licensing fee. Other types of businesses do—fees range from $10 to $5,000.
In Delaware, a business license costs $75 for the first year. A 75% discount is available to business owners who are 65 years of age or older and meet other eligibility requirements.
Business startup costs for Florida merchants range from $87.50 to just over $1,000, depending on your business type. Florida doesn’t have the same business licensing requirements and processes as many other states, but it does require a seller’s permit or sales-and-use tax permit.
Georgia charges a non-refundable “investigation fee” of $100. Additional license fees apply to certain types of businesses. Breweries, distilleries, and wineries, for example, need to pay an additional $1,000. Retailers and wholesalers may also be required to pay additional fees, ranging from $50 to $1,000.
Hawaii requires merchants to get a General Excise Tax (GET) license to operate their businesses. This license has a one-time $20 fee.
Idaho doesn’t have a state-wide business license. Some, but not all, jurisdictions require their own local business license. Limited information is available online.
Illinois doesn’t issue a general state business license, but certain regulated professions do require a professional license for operation. There may be a local city or county license requirement, depending on the location of business. In Chicago, additional fees for specific industries may also apply. Pop-up shops, for example, pay $25 for five days, $50 for 50 days, and other tiered pricing up to $125 for a year. Businesses can check with their local municipality or Small Business Development Center for more information.
Indiana requires businesses submit a Form BT-1 application for taxes—one for each business location. Retail shops must pay a non-refundable $25 fee for their Retail Merchants Certificate.
Iowa business license requirements vary based on whether the business is regulated by an Iowa authority or licensing board. Most retail businesses need a sales tax permit. Registering a trade name in Iowa usually costs under $10. Businesses need to check with their Regional Small Business Development Centers for further assistance and information.
Kansas-based businesses don’t need to pay a general business license fee to the state. Instead, licensing and fees are handled at the county and city levels.
Kentucky doesn’t have a statewide business license requirement. Certain types of businesses need one or more special permits or licenses.
Louisiana also doesn’t have a statewide business license requirement. However, many cities have their own licensing requirements and fees. New Orleans, for example, bases fees on the gross sales of particular types of businesses.
General business licenses are managed at the city/town level in Maine. In Portland, there’s a $45 business license application fee, and renewals cost $35 for the year. You can go to the licensing center on Maine’s Business Answers website for requirements and fees for each city.
Maryland doesn’t require a general business license. However, there are licensing and permit requirements depending on the type of business. If you use a warehouse to store inventory, for example, a storage warehouse license will cost $30–$150 each year, depending on the population size of the local municipality.
In Massachusetts, licensing and permits are based on the type of industry.
Business licensing in Michigan is heavily based on the type of business. Licensing fees vary widely.
Minnesota charges an initial filing fee ranging from $30 to $200 if done by mail ($50 to $220 if done in person or online). There’s no annual renewal fee. Some cities and counties may have additional licenses and fees.
Mississippi has a $50 initial filing fee, plus a $25 annual report fee, however, there’s no official state-issued business license.
Filing fees in Missouri are based on the amount of authorized capital a business has. Costs range from $58 to $143.
The state of Montana doesn’t require a general license, although some industries must file for a license with the Department of Revenue. Most cities and counties have their own rules regarding business licenses. Bozeman, for example, requires all businesses to be licensed, and the application fee is $25 ($150 for medical marijuana businesses). Business owners can check with their local county for specific licensing requirements.
There isn’t a general license requirement in Nebraska, but certain businesses may have to file a license with the state. Certain cities require their own license, so business owners should reach out to their local government for specific local requirements.
Nevada requires that all businesses have a State Business License that must be renewed annually. The renewal fee is $500 for corporations and $200 for all other business types. The fee and form are due on the last day of the anniversary month that the business license was originally filed. Additionally, Nevada requires that businesses obtain a local license with the city/county in which they operate.
New Hampshire doesn’t require businesses to have a general business license to operate. However, license requirements vary based on industry type.
All businesses must register for a business license in New Jersey. For-profit businesses and foreign non-profit corporations have to pay $125, while domestic non-profit corporations owe a discounted fee of $75.
New Mexico doesn’t have statewide business license stipulations. However, licensing may vary between cities. For example, Taos requires a $35 registration fee.
While businesses don’t have to pay for a state license with New York, many have to get a license at the local level. In New York City, you must file a Business Certificate (also called a Certificate of Assumed Name) form at the county clerk’s office, with fees ranging from $100 to $120.
In North Carolina, it costs $125 to file the Articles of Incorporation and $30 to reserve a corporate name. Other fees may also apply.
North Dakota doesn’t issue state business licenses. However, some businesses may need to register based on their industry, with fees ranging from $0 to $5,000.
Ohio doesn’t have general business license requirements but it does require any person or business who is making retail sales with “tangible personal property or taxable services” to register for a vendor’s license, which costs $25. Additional licenses and fees may also apply.
Oklahoma doesn’t require a state-issued business license. There are additional licensing requirements for some industries.
Like Oklahoma, there’s no state business license in Oregon, though some industries need to abide by additional parameters. Some cities and counties also require a license.
Businesses in Pennsylvania must pay $125 to file their Articles of Incorporation with the state. There’s also a $70 annual report fee.
Initial filing fees in Rhode Island range from $150 to $230 depending on the business structure. There’s also an annual $50 report fee ($60 for benefit corporations) and an annual $400 tax fee.
South Carolina doesn’t have a statewide business license. Licenses, permits, and regulations are all administered at the local level.
South Dakota doesn’t have a general business license fee, however, some businesses will need registrations/permits based on the industry.
In Texas, businesses have to register to pay tax. All new businesses must register and pay a $15 fee. In-state businesses need either a minimal activity license (if you gross more than $3,000 but less than $10,000) or a standard business license (if you gross more than $10,000).
Texas doesn’t have any general business licensing requirements or fees.
Utah requires all businesses to obtain a license from their local municipality, each with its own requirements.
Vermont charges a one-time fee of $125 for filing Articles of Incorporation. Businesses also pay an annual report fee of $45.
Businesses in Virginia can register with Business One Stop for $20.
Most businesses in Washington need to register for a business license. Processing fees range from $0 to $90.
West Virginia doesn’t have a general business license. Terms and requirements vary by business entity.
Wisconsin doesn’t require a statewide business license. You’ll need to register with the state to ensure you’re properly collecting and paying sales tax.
Wyoming doesn’t have a state-issued business license but requires businesses pay an annual $25 registration fee.
Make your business legit
Registering your business and getting the necessary licenses and permits is imperative to long-term success. Once you have those tedious steps out of the way, you can get back to the fun parts of launching and growing your business.