Every founder works through a checklist when starting a business. Each completed step brings the business closer to operating legally. The business entity is formed, and the Employer Identification Number (EIN) is issued by the Internal Revenue Service (IRS). The next step is securing the licenses and permits required to operate, and this stage looks different for every business.
Requirements vary based on the type of business and where it operates. Some activities are regulated at the federal level, while most licensing obligations are handled by state and local governments. Because approval is tied to both industry and location, founders must confirm what applies before beginning operations. For business owners on a visa, staying properly licensed supports overall compliance.
Many founders ask whether they need a business license before opening their doors. The answer is determined by the type of activity and where the business operates.
This guide explains what business licenses and permits are, who issues them, and how to determine which ones apply to your business.
Who issues business licenses and permits?
Business licenses and permits are issued at different levels of government. The level of authority depends on the type of activity and where the business operates.
Federal licenses are required only for certain regulated industries. These are issued by specific federal agencies and apply to activities that are regulated nationwide.
State licenses are issued by state agencies. States regulate many professions and industries, including construction trades, healthcare, financial services, and other licensed occupations.
Local licenses and permits are issued by city or county governments. These may include general business licenses, zoning approvals, health permits, and building permits.
A business may need approvals from more than one level of government. Requirements depend on the nature of the business and its physical location.
Federal licenses and permits
Certain business activities are regulated at the federal level. If your business operates in one of the industries listed below, a federal license or permit may be required by the issuing agency shown. The U.S. Small Business Administration identifies the following activities as requiring federal licenses or permits.
| Business activity | Description | Issuing agency |
| Agriculture | Import or transport across state lines of animals, animal products, biologics, biotechnology, or plants | U.S. Department of Agriculture |
| Alcoholic beverages | Manufacture, wholesale, import, or sale at a retail location | Alcohol and Tobacco Tax and Trade Bureau; Local Alcohol Beverage Control Board |
| Aviation | Aircraft operation; transport of goods or people by air; aircraft maintenance | Federal Aviation Administration |
| Firearms, ammunition, and explosives | Manufacture, sale, or import | Bureau of Alcohol, Tobacco, Firearms and Explosives |
| Fish and wildlife | Wildlife-related activities, including import or export of wildlife or wildlife-derivative products | U.S. Fish and Wildlife Service |
| Commercial fisheries | Commercial fishing of any kind | National Oceanic and Atmospheric Administration Fisheries Service |
| Maritime transportation | Transport of people by sea; shipment of cargo by sea | Federal Maritime Commission |
| Mining and drilling | Drilling for natural gas, oil, or other mineral resources on federal lands | Bureau of Safety and Environmental Enforcement |
| Nuclear energy | Production of commercial nuclear energy; operation as a fuel cycle facility; distribution and disposal of nuclear materials | U.S. Nuclear Regulatory Commission |
| Radio and television broadcasting | Information broadcasts via radio, television, wire, satellite, or cable | Federal Communications Commission |
| Transportation and logistics | Operation of an oversize or overweight vehicle. Permits are issued by your state government, but the U.S. Department of Transportation can direct you to the correct state office | U.S. Department of Transportation |
State licenses
Most business licensing requirements are established at the state level. States regulate many professions, trades, and regulated business activities.
A business may need a state license if it operates in a regulated field. Common examples include:
- Healthcare professions such as physicians, nurses, and other medical providers
- Legal and financial services
- Construction trades and contractors
- Real estate brokers and agents
- Insurance and financial services
- Personal care services such as cosmetology
State licensing requirements vary by profession and by state. Each state sets its own eligibility standards, application procedures, and renewal requirements.
Before beginning operations, business owners should review the licensing rules of the state where the business will operate.
Local licenses and permits
In addition to federal and state requirements, many businesses must obtain licenses or permits from the city or county where they operate.
Local governments often require a general business license before a company may open its doors. Depending on the nature of the business, additional local approvals may be required. These can include:
- Zoning clearance to confirm the location is approved for the intended activity
- Health department permits for food-related businesses
- Building permits for construction or renovation
- Fire safety inspections
- Certificates of occupancy
Local requirements vary by municipality. Business owners must confirm the rules of the specific city or county where the business is located.
How to determine what business licenses and permits you need?
Licensing requirements depend on three factors:
- The type of business activity
- The state where the business operates
- The city or county where the business is located
Business owners should begin by identifying whether their industry is federally regulated. Next, they should review state licensing requirements for their profession or activity. Finally, they should check local government requirements for general business licenses and zoning approvals.
Official state and local government websites provide licensing information. The U.S. Small Business Administration also offers guidance and links to state business portals.
Conclusion
Licensing requirements are part of building a business the right way. While the rules vary by industry and location, the process becomes manageable once you understand which level of government regulates your activity.
Taking the time to confirm federal, state, and local requirements helps your business open with confidence. With the proper licenses and permits in place, you can focus on operating and growing your business knowing that the foundation is sound.
Sources:
- U.S. Small Business Administration (SBA). https://www.sba.gov/business-guide/launch-your-business/apply-licenses-permits