9 Common Business Licenses
- Employer Identification Number (EIN)
- Doing Business As Name (DBA)
- General Business Operation License
- Seller’s Permit
- Sales Tax License
- Home Occupation Permit
- Zoning and Property Use Permits
- Health Licenses and Permits
- Occupational License
What Kinds of Business Licenses Does a Small Business Need to Operate?
Some licenses, including an employer identification number (EIN) and doing business as name (DBA), are considered basic requirements across all industries. However, obtaining business licenses is not one-size-fits-all across the board. Businesses in specific industries, like a restaurant that serves alcoholic beverages or a company that provides medical and telehealth services, also require additional specialty business licenses.
Ultimately, the type of business license(s) a company needs varies depending on city, county, state, and industry requirements. Check with your local Secretary of State to determine the full list of business licenses and/or permits your business may need.
Let’s review some of the most common types of licenses for companies in various industries. Don’t let the length of this list scare you off! Filing for and obtaining business licenses isn’t nearly as complicated as it may seem, especially for small businesses.
1. Employer Identification Number (EIN)
What is an employer identification number (EIN)?
An employer identification number goes by a few different names. Sometimes it is referred to as an EIN or a federal tax ID. The IRS issues this nine-digit number to a small business. It identifies the business as a distinct tax entity and ensures that the company collects payroll taxes. Essentially, an EIN helps keep small businesses in compliance and is a requirement in the event the business plans to hire employees or open a business bank account.
Learn more about Employer Identification Numbers (EINs).
What business needs an EIN?
Any company that plans to hire employees, open a business bank account, or establish a business credit profile.
2. Doing Business As (DBA)
What is a Doing Business As (DBA)?
A doing business as name (DBA) is not a mandatory business license requirement. However, it is helpful for any business owner that plans to operate their business under a name that differs from their own. Once a DBA has been registered, the company may conduct business transactions and even open a business bank account.
What business needs a Doing Business As (DBA)?
Any business planning to operate under a name that is not the same as their own.
3. General Business Operation License
What is a general business license?
A general business license allows businesses to conduct business in their specific location. This license allows the state to track the activities of the company. It is a requirement for companies with a physical location and necessary for eCommerce businesses.
What business needs a general business operation license?
Pretty much every business needs this business license. It’s universal to nearly every type of business, from retail storefronts to eCommerce shops.
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4. Seller’s Permit
What is a seller’s permit?
For a small business to legally sell products online, they must first obtain a seller’s permit. This is also true of goods and services that are digital or intangible. Obtaining a seller’s permit is a requirement in almost every state. Remember that additional business licenses may be necessary depending on the items sold by the small business, including any businesses that sell liquor or lottery tickets.
What business needs a seller’s permit?
Small businesses that sell goods or services online.
5. Sales Tax License
What is a sales tax license?
A sales tax license, as mentioned above, is necessary for small businesses in areas that charge sales tax or for businesses that sell taxable products and/or services. Sales tax differs from state to state, so it’s critical that small businesses check in with the state to ensure they have all necessary sales tax licenses from one (or more) states to avoid tax penalties.
What business needs a sales tax license?
Home-based businesses that operate in regions that charge sales tax or sell taxable products and services.
6. Home Occupation Permit
What is a home occupation permit?
Want to run a small business from the comfort of home? Filing for a home occupation permit ensures your neighborhood is zoned for home business activity and allows you to legally operate the business from home. Remember that when filing, business owners must be able to provide information pertaining to their business not adding additional noise or traffic to their respective community.
What business needs a home occupation permit?
Small business owners that plan to operate their business from home.
7. Zoning and Property Use Permits
What is a zoning and property use permit?
Small businesses planning to operate outside of the home need to make sure the area they are working from is zoned for their specific business. This includes both the business’ location and its parking area. A zoning and property use permit checks to ensure these areas meet local zoning codes.
What business needs zoning and property use permits?
Small businesses owners operating out of their homes.
8. Health Licenses and Permits
What is a health license?
Essentially, a health license is required when opening a business that relates to the health and wellbeing of the customer. This ensures their safety on the premises and that the business is fulfilling all necessary rules to keep them safe and healthy.
What business needs health licenses and permits?
Any sort of business relating to customer health. Some of these include restaurants, gyms, and nail salons.
9. Occupational License
What is an occupational license?
An occupational license is obtained by a business owner in a specific occupation or line of work. Need help determining if an occupational license is required for your business? Try using tools like the National Occupational Licensing Database to determine if an occupational license is necessary for your role.
What business needs an occupational license?
Businesses, and business owners, in fields that require necessary licenses to practice their occupation or profession. A few of these may include real estate agents, doctors, lawyers, accountants, and architects.
10. Additional Small Business Licenses and Where to Find Them
Beyond the business licenses mentioned on this list, what other licenses are necessary for small businesses? Ultimately, additional business licenses vary depending on the company’s city, state, and industry requirements. Check with your local Secretary of State to determine the full list of business licenses and/or permits your business may need.
Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. MyCorporation does all the work, making the business formation and maintenance quick and painless, so business owners can focus on what they do best. Follow her on Twitter @deborahsweeney and @mycorporation.