What Kind of Businesses Need a License?

Just about all businesses, from home-based operations to cafes and warehouse distributors, need a business license of some sort. The type of business license a business owner needs greatly varies depending upon the industry the business is in, products and services it sells and state it is located in. However, there are many common licenses that different types of businesses need.

There are two basic licenses that most businesses will have to obtain prior to start up: the fictitious or assumed name certificate, commonly known as a DBA (“doing business as”), and an employer identification number or EIN. A DBA is needed anytime you are doing business under a name other than your legal name--this includes businesses in Texas, which can obtain a DBA at the county level. The fee to get a DBA varies by county.

EINs can be obtained for free from the Internal Revenue Service (IRS) online and are also known as a federal tax identification number. An EIN is needed if you will have employees, have a Keogh plan (a pension plan for the self-employed) or are operating as a corporation or partnership.

A retail business is a store or any type of operation that sells products to consumers or other businesses. This includes salons that sell hair products, clothing stores, e-book retailers and wholesalers. The type of retail license a business needs depends upon where it is located and what it sells. For instance, you may need a resale permit, sales tax and use permit to collect taxes on the goods you retail or a license to sell tobacco and firearms.

Food businesses are heavily regulated because the making and consumption of food is a public health concern. Most food businesses must get a food enterprise license, food manager certification, food handler permits and inspection certificates before serving customers. Restaurants and businesses that serve alcohol must also get a special permit to buy, serve and sell liquor. This is often referred to as a liquor license. Liquor licensees tend to be expensive, costing several thousand dollars in many states, including Texas.

Occupational licenses are needed to operate salons and spas. State requirements vary widely for these types of businesses, but are usually regulated by a cosmetology board. For example, the Texas Board of Cosmetology has specific, separate requirements for hair braiders, barbers, nail artists, hair stylists, estheticians and those who operate wig shops. To obtain a cosmetology license, you will likely need to undergo state-approved training or an apprenticeship.

Several types of contracting services, including landscapers and builders, need environmental permits, an occupational license or must obtain certification before advertising or performing any work. In Texas, electricians, architects, interior designers and building contractors need to be licensed by the Texas Department of Licensing and Regulation or the Texas Board of Architectural Examiners. In addition, these businesses need a DBA and EIN, if they will operate under a name other than that of the owner, or if they will have employees.