If you run a business, you might need a license, permit, or certificate of some kind in order to operate.
You might even need more than one of these documents, depending upon the work that you do. If that’s the case, you certainly aren’t alone, as many businesses have to apply for licenses or permits from local, state, and federal governments.
What are the types of business licenses out there, as well as the requirements associated with them? This article should help clear up some of your questions.
Just keep in mind that, while we’ve made every effort to ensure the information below is up-to-date and accurate, it doesn’t constitute legal advice, and it isn’t a substitute for legal advice. If you have specific questions about your particular business, contact your attorney for guidance.
The Basics on Federal Licenses and Permits
For most small businesses, the federal government doesn’t require licenses or permits. But there are certain types of activities that are regulated by one or more federal agencies, and those activities might require a federal license or permit.
What are the types of business activities that are regulated by federal agencies and may require a federal license or permit?
- Alcoholic beverages
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
So, if you’re involved in any federally regulated activity, the next step would be to contact the federal agency that’s in charge of that activity. Find out what its requirements are and then follow through so that you can conduct business legally.
As an example, if your business is involved with aviation, you’d be regulated by the Federal Aviation Administration, so that would be the place to go for more information
Tip: You can access a list of all federally licensed activities, along with links to more information, by visiting this website, maintained by the U.S. Small business Administration.
What About California State Requirements?
There are a few states in which all businesses need to obtain state business licenses, in addition to any local licenses required. Those states include Alabama, Alaska, Delaware, Florida, Ohio, Nevada, and Washington State.
California doesn’t have a license requirement for all business across the state. However, just like all other states, it does have license and/or certification requirements for an array of business activities and occupations that require extensive training or that expose consumers to potential hazards. Those include:
- Medical professionals
- Building contractors and other construction related occupations
- Barbers and cosmetologists
- Architects and engineers
- Real estate brokers and salespersons, and
- Private investigators and other security services
Let’s use an example here to clarify:
If you want to work as an architect in California, you’ll need to get a license from the California Architects Board. Makes sense, right?
If you want to look through a comprehensive list of all of the occupations that are regulated by California state agencies, as well as access links to the appropriate agency that would apply to your business, click here.
Note: The procedures for getting your business license will vary from one occupation to the next. You might have to meet specific educational or training requirements, or you might need experience in the field. You might even have to take a written exam and pass it before getting your license. And, as you might have guessed, there is a license fee that you’ll need to pay as well.
What About Local Licenses?
Let’s say that you aren’t required to get a federal license or a state license. You might think that you’re in the clear. Think again. There’s actually a good chance that you’ll need to get a local business license.
Each California city and county establishes its own licensing requirements and procedures.
Keep in mind, though, that most counties and cities in the state require business licenses or permits for all businesses, including one-person, home-based operations.
- If you’re conducting business within a city’s limits, check with your city government to determine licensing requirements.
- If you’re in an unincorporated area, check with the county government.
- If you have an office in more than one city or county, you might need to get a license for each one.
What can you expect to pay?
Usually, you just have to pay a fee to get a local license in California, but some cities exempt very small businesses, so that’s helpful for little guys that are first starting out.
Fees will vary by locality, and they could range from as low as $15 to as high as a few hundred dollars.
Fees can also be based on your projected gross revenue (for example, 10 cents per $1,000 of projected revenue).
The good news is that getting your local license is pretty easy!
Basically, your city and/or county has a website that will explain its licensing requirements. Click here to find a link to the local website that you need.
Once you know where to go, you might have the option of applying for your license online. Otherwise, you might be able to download an application and email it to the appropriate party or just mail it in.
What will you need to provide when submitting an application for a local business license?
You’ll likely be asked for the following information:
- Social Security Number or Federal Employment Identification Number
- A description of your business activities
- Your legal business name and any assumed name or “dba”
- Your business start date
- The number of employees and your expected annual sales
- Your business address and contact information,
- Each business owner’s contact information
- Your business sales tax number, if any
After submitting your application, display and renew your license, as needed.
You’ll usually receive your license or certificate with a business license number within a few weeks in the mail.
Once you have your license in your possession, you may be required to post it at your place of business.
Just keep in mind that you’ll be required to renew your license periodically, and that might involve an additional fee.
Oftentimes, a renewal is required every one to three years, so be sure to mark your calendar so you don’t skip a beat and so you don’t have to pay late fees.
Do you really need to worry about getting your local license?
While it’s true that a lot of self-employed individuals, particularly those who work from home, never get a local business license, if your local government were to find out that you’re running an unlicensed business, you might be fined, and you might even be prevented from doing business until you obtain the license.
So it’s always best to avoid problems by researching the license(s) you need and applying for them so you can do business without having to worry.
An Easier Way to Tackle Business Licenses!
Feeling a bit overwhelmed over the idea of researching required federal, state, and local business licenses? We get it; it’s a daunting and time-consuming process! That’s why we’ve created a way to make it easy for freelance business owners to get the licenses that they need to operate.
When you sign up for an account with Hyke, you’ll gain access to an organized dashboard for tracking the most important aspects of establishing and maintaining a business. From forming your LLC, to obtaining and renewing your license, we’ve got you covered. You won’t have to worry about missing an important deadline, filling out an application incorrectly, or failing to pay the appropriate fees on time. We’ve got your back and will support you at every step.
Ultimately, business licenses can seem confusing at first because you have to sort out the details on the federal, state, and local level. But once you know what’s required of your particular business in your specific niche, you’ll be well on your way to conducting business legally and professionally.
Stephen has dedicated his career as an attorney and author to writing useful, authoritative and recognized guides on taxes and business law for small businesses, entrepreneurs, independent contractors, and freelancers. He is the author of over 20 books and hundreds of articles and has been quoted in The New York Times, Wall Street Journal, Chicago Tribune, and many other publications. Among his books are Deduct It! Lower Your Small Business Taxes, Working with Independent Contractors, and Working for Yourself: Law and Taxes for Independent Contractors, Freelancers & Consultants.