What type of business license do I need?

A commercial license gives the business owner the legal right to market in a specific geographic area. In many states and local governments, business owners are asked to purchase a license. The type of license you need depends primarily on your occupation and the issuing institution.

License types

A federal business license is required for businesses that are more regulated or severely supervised by the federal government, such as firearms, explosives, mining and drilling, aviation and manufacturing of alcoholic beverages. The state licensing board has the requirements of your state to receive a license. According to the Small Business Administration, occupations such as evaluators, accountants, barbers, private researchers, cosmetologists, and construction companies usually require a state license. Your local municipality determines if you need a local license. In many cases, a license for a local business is required to do business in a certain area, even if the state does not require it.


To obtain a commercial license, request the procedure from the agency in charge. Many states allow you to apply for a state license through the secretary of state’s office. But in other cases, you may need to make a request through another department. For example, for a child care license, you would need to apply to the state child care division. Go to your town hall for a municipal license and ask your county government for an appropriate license for that area. For a federal license, you must apply to the appropriate agency, such as the Bureau of Alcohol, Tobacco, Firearms, and Explosives to obtain a license to sell weapons.


The fees for commercial licenses vary depending on the institution and occupation. For example, in September 2010 in the city of Boise, Idaho, the fees were the US $ 116.20 for a new license, US $ 34.25 for fingerprints and the US $ 10 for a judicial background check. The California Contractors State License Board charges the US $ 250 as an application fee and the US $ 150 for a California contractor license. The Federal Maritime Commission charges $ 825 for a new intermediate maritime carrier license. In Clark County in Nevada, $ 45 per application and $ 300 are charged for a license in the advertising business. Licenses usually last one year.


When you apply for a local license, the department makes sure that you agree with the local laws of the area; If not, you first need to obtain a permit from the area. Also, if you are involved in retail sales, you must charge a tax on the items sold. In this case, you must apply for a seller’s permit or a tax license from your state’s tax department, income management department or state equalization board.


Small business owners get free training and advice from SCORE, which is affiliated with the Small Business Administration. In addition, the SBA district offices offer free training and advice to small business owners. Your local government can tell you what type of license your business requires and how to obtain it.