Business
Business License: What You Need and How to Get It
Published September 24, 2026 · Last updated October 1, 2026
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The short answer
There's no single "U.S. business license." Instead, most businesses need one or more licenses or permits from federal, state, and local governments, depending on what you do and where you do it. Many small businesses only need a local license and maybe a state one. Some industries also need federal approval.
Here's how the three layers work, which businesses need what, and how to find your exact requirements.
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The three layers of business licenses
| Level | Who needs it | Where to apply |
|---|---|---|
| Federal | Only businesses in federally regulated industries | The federal agency that regulates your activity |
| State | Many trades and professions, and some general business types | Your state's licensing boards and agencies |
| Local | Most businesses, including many home-based ones | Your city or county |
You might need licenses at all three levels, or only one. It depends on your business.
Federal licenses: only for certain industries
Most small businesses don't need a federal license. According to the Small Business Administration, you need one if your business does something regulated by a federal agency, such as:
- Alcohol: making, importing, or selling wholesale (the Alcohol and Tobacco Tax and Trade Bureau, plus local alcohol boards)
- Firearms and explosives (ATF)
- Agriculture: importing or moving animals, animal products, or plants (USDA)
- Aviation (FAA)
- Commercial fishing (NOAA Fisheries) and fish and wildlife activities (U.S. Fish and Wildlife Service)
- Radio, TV, or satellite broadcasting (FCC)
- Shipping by sea (Federal Maritime Commission)
- Offshore drilling and mining (Bureau of Safety and Environmental Enforcement)
- Nuclear energy (Nuclear Regulatory Commission)
- Oversize or overweight trucks (permits issued by states)
If your business isn't on a list like this, you can usually skip the federal step.
State licenses: trades, professions, and more
States license a much wider range of activities. The SBA lists examples like construction, plumbing, restaurants, retail, dry cleaning, farming, auctions, and vending machines. Many professions, from cosmetology to real estate to accounting, also need a state license.
Example: contractors in California. California requires a state contractor's license for any job of $1,000 or more, counting labor and materials. A handyman who takes bigger jobs without one can face fines and trouble getting paid.
Your state may also require a sales tax permit if you sell taxable goods or services. Check with your state's revenue department.
Local licenses and permits
Your city or county usually issues the license most people mean when they say "business license." Local governments may also require:
- Zoning approval, especially if you work from home
- Building, health, or fire permits, for restaurants, salons, and shops
- Signage permits
Local rules vary the most, so call or check the website for your city and county clerk.
What a business license costs
There's no single price. The SBA says fees and requirements vary based on your business activities, your location, and government rules. Many licenses also expire after a set time, so plan for renewal fees.
Licenses are only part of startup paperwork. Registering your business with the state usually costs less than $300 in fees. See business formation costs.
How to find out what you need
- Pick your business structure and register it with your state, if needed. See how to start an LLC.
- Get an EIN, your business tax number, from the IRS if your business needs one. It's free. See what an EIN is.
- Check federal rules if your industry is on the list above.
- Check your state's business and professional licensing pages. Your Secretary of State's website is a good place to start.
- Check with your city and county for local licenses, zoning, and permits.
- Set renewal reminders.
Using a different name than your legal name? You may also need to register a DBA. See DBA: doing business as.
Many licenses require insurance or a bond. Contractors and other trades often have to show general liability insurance or a surety bond to get licensed.
Keep reading
Starting from scratch? See business formation costs and registered agent service.
Run your business: Business formation · DBA (doing business as) · Registered agent · Payroll services · Merchant processing · POS systems · Business phone · Business internet · How to start an LLC · What an EIN is · All business services
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