Which licenses and permits a small business needs at the federal, state and local level, how to find out what applies to you, and what to set up before you hire your first employee.
New owners often expect one form and one fee. In reality, licensing in the United States is split between federal, state, county and city governments, and what you need depends on what you do, where you do it and how you are set up. A home-based bookkeeper might need only a city business tax certificate. A restaurant may need a dozen licenses and permits before it can open.
The good news is that the process follows a predictable pattern. Work through the levels in order and keep a list of everything you apply for, with renewal dates.
Before applying for licenses, decide how the business is set up. A sole proprietorship generally needs no formation filing, while an LLC or corporation is formed with your state. If you operate under a name that is not your own legal name or your registered entity name, register an assumed name or DBA with your state or county. Our guide to sole proprietorships explains the simplest option.
Get an Employer Identification Number (EIN) from the IRS if you will hire employees or form an entity that needs one. It is free when you apply directly with the IRS.
Most cities and many counties require businesses operating within their limits to register and obtain a general business license, sometimes called a business tax certificate or business tax receipt. Contact your city or county clerk, or check their website, for:
All licensing steps checked off.
Local rules vary widely. If you operate in more than one city, you may need a license in each.
At the state level, the most common requirements are:
Many states have an online business portal or one-stop registration site that lists what applies to your business type. Our state labor law pages cover the employment rules that come with having staff.
Most small businesses do not need a federal license. Federal licenses and permits are required for specific regulated activities. Examples include:
| Activity | Federal agency involved |
|---|---|
| Making, importing or wholesaling alcohol | Alcohol and Tobacco Tax and Trade Bureau (TTB) |
| Dealing in or manufacturing firearms | Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) |
| Commercial trucking across state lines | Federal Motor Carrier Safety Administration (FMCSA) |
| Broadcasting | Federal Communications Commission (FCC) |
| Commercial fishing and some wildlife activities | National Oceanic and Atmospheric Administration (NOAA) / US Fish and Wildlife Service |
| Commercial drone operation | Federal Aviation Administration (FAA) |
The US Small Business Administration publishes guidance on federal licenses and links to each agency.
Here are common examples for industries where many EZTime customers work. Always confirm locally.
| Industry | Typical requirements |
|---|---|
| Restaurants and cafes | Local business license, food service or health permit, food handler cards, liquor license if serving alcohol, fire inspection |
| Construction and trades | State or local contractor license, trade licenses for electrical, plumbing and HVAC work, building permits per job, bonding and insurance |
| Cleaning services | Local business license; bonding and insurance often required by clients rather than law |
| Salons and spas | State cosmetology or barber establishment license, individual operator licenses, local business license |
| Security services | State security company license, individual guard registrations or licenses in many states |
| Home care | State home care or home health agency license in many states, background checks for caregivers |
For industry-specific operations guidance, see EZTime pages for restaurants, construction and cleaning services.
Hiring adds another set of registrations and obligations:
The U.S. Small Business Administration sums up the licensing picture in three points:
Read together, these mean there is no single national checklist. Start with your city or county business office, then your state’s business portal, then any federal agency that regulates your activity. Keep a one-page list of every license, the issuing office, the number and the renewal date.
Licenses expire, and operating with a lapsed license can mean fines or, for some trades, being unable to enforce payment on a contract. Keep one list of every license, permit and registration with its number, issuing agency, renewal date and cost. Set reminders well before each renewal. Employee-level licenses, such as food handler cards, security guard registrations or trade licenses, also expire, and tracking them is easy to forget. EZTime’s digital employee file stores documents with expiry reminders, so you know before an employee’s certification lapses.
Most small businesses do not. Federal licenses are required only for specific regulated activities, such as alcohol production or wholesale, firearms, interstate trucking, broadcasting and commercial drone use.
Start with your city or county clerk for a general business license, then check your state’s business portal for sales tax permits, professional licenses and employer registrations.
Costs vary widely by city, county, state and type of business. A general local license can be modest, while professional or liquor licenses can be much more. Check the fee schedules of the issuing agencies.
Often yes. Many cities require a general business license and may require a home occupation permit or zoning approval, even if customers never visit.
An EIN, state withholding and unemployment insurance registrations, workers’ compensation insurance in most states, required labor law posters, Form I-9 and W-4 for each hire and a system for tracking hours worked.
A business license gives you general permission to operate in a city, county or state. A permit covers a specific activity or place, such as a health permit for food, a sign permit or a building permit. Many businesses need one license and several permits.
Simple local licenses can be issued within days, sometimes online. Professional, health or alcohol licenses can take weeks or months because of inspections, exams or background checks. Apply for the slowest one first.
As soon as you have hourly staff, two jobs take more time than most owners expect: recording hours accurately and building a schedule everyone can see. Under the federal Fair Labor Standards Act (FLSA), employers must keep accurate records of hours worked and pay non-exempt employees overtime for hours over 40 in a workweek, and some states add daily overtime or meal-break rules. This is general information, not legal advice.
EZTime covers all three with a time clock app, employee scheduling and payroll-ready exports, from $2 per employee per month. See pricing and start a 14-day trial.
Once your first employees start, EZTime tracks their hours, breaks and schedules from day one, so your records are in order for payroll and any audit.