Business License Laws

••• Neon Open sign 2 image by Edward Stephens from

Your business may be bound by laws requiring different types of business licenses and permits. Business license requirements vary among states and counties. Different licensing laws apply to organization types and physical business locations. Prerequisite licenses, permits and obligations may also apply if you work in certain industries. These legal obligations apply to both new and expanding businesses. Most licenses also need to be renewed after a period of time.

Organizational Structure

To become licensed, a business must organize in one of several forms. The Internal Revenue Service allows a business to organize as an LLC, corporation, S corporation, nonprofit, partnership or sole proprietorship. Once the business has a structure, it must register with the state or local government to become a legal entity. In many states, each organizational type has different business licensing requirements.

Business Name

A business must register its name before obtaining a license. The name of the person or partnership that owns the business is automatically its legal name, according to Corporations may choose their own names. A business name must be registered with state and local governments. If a business wants to operate under an alternate name, it often needs to register an assumed name or fictitious name, which must not already be in use. In San Diego County, for example, if a business's legal title doesn't use each owner's surname, the business must file a Fictitious Business Name Statement with the county clerk. Additionally, some areas require businesses to publish a Fictitious Business Name Statement in the local paper, so the owner's names and the business's alternative name are publicly known. Then the business must show proof of the publication to the county clerk.

Tax Registration

All businesses that have employees including partnerships, corporations and other organization types must get an Employer Identification Number, also know as an Employer Tax ID, from the Internal Revenue Service. A business also may need a state tax identification number and permit, according to Businesses selling goods and collecting sales tax may need a sales tax permit or a vendor’s license too.


In most states, small businesses simply need a general business license to operate. Some need special industry-specific licenses and permits. My Own notes that special cases include those selling gasoline, firearms, liquor, lottery and tickets. Business such as clubs, restaurants and bars may need special permits or licenses from the fire department. Restaurants, bars, markets and other food handlers may also need a health department license. Land use and zoning permits may also apply for some businesses. A federal business license may be necessary in industries including investment advising, ground transportation, drug manufacturing, meat processing, broadcasting, alcohol, tobacco and firearms.

These additional regulatory licenses require businesses to observe industry specific regulations. For example, a tattoo parlor in Seattle must have a tattoo license and obey certain facility, operational and record keeping requirements. It must also not unlawfully tattoo any minors. An electrician in Oregon must be licensed by the state to ensure he has the proper training.


About the Author

Kenny Brown has been a freelance writer for six years. Also a former news reporter, his works have appeared in the Bellingham Business Journal, New Britain Herald, Paddler Magazine, Paddle Dealer Magazine and Portland Magazine. Additionally, he has developed promotional copy for Web and print. He holds a bachelor's degree in communications and a master's degree in journalism.

Photo Credits

  • Neon Open sign 2 image by Edward Stephens from