Business Licenses and Permits You Need
Federal Licenses and Permits
Most small businesses do not need a federal license. There is no general federal business license that all businesses must have. Federal licensing requirements apply only to specific regulated industries. If your business involves any of the following, you need a federal license or permit from the relevant agency: alcohol production, distribution, or import (Alcohol and Tobacco Tax and Trade Bureau), firearms manufacture or sale (Bureau of Alcohol, Tobacco, Firearms and Explosives), commercial fishing (National Marine Fisheries Service), aviation (Federal Aviation Administration), freight brokerage or trucking (Federal Motor Carrier Safety Administration), radio or television broadcasting (Federal Communications Commission), or drug manufacturing (Food and Drug Administration).
For ecommerce businesses, the most common federal requirement is FDA compliance if you sell food, beverages, cosmetics, dietary supplements, or over-the-counter health products. The FDA does not issue a "license" for most of these categories, but it does require facility registration, product labeling compliance, and in some cases pre-market notification. If you sell food products, you must register your facility with the FDA (free), comply with labeling requirements (ingredients, allergens, nutrition facts), and follow Current Good Manufacturing Practices (CGMPs). Failure to comply can result in product seizure, injunctions, and fines. Our product safety and compliance guide covers these requirements in detail.
State Business Licenses
State requirements vary enormously. Some states (Alaska, for example) do not require a general business license at the state level. Others (Washington state) require every business operating within the state to hold a state business license. The most common state-level requirement for ecommerce sellers is a sales tax permit (also called a seller's permit, certificate of authority, or sales tax license depending on the state). If your state has a sales tax and you sell taxable goods, you must register for a sales tax permit before collecting tax from customers.
To get a sales tax permit, apply through your state's department of revenue or tax commission website. The application asks for your business name, EIN or SSN, business address, expected monthly sales volume, and the types of products you sell. Most states issue the permit for free, though a few charge a small fee ($10 to $50) or require a deposit based on your expected tax liability. Once registered, you must collect the appropriate sales tax rate on taxable transactions and file returns on the schedule your state assigns (monthly, quarterly, or annually based on your sales volume).
Some states also require specific licenses for certain business activities. If you sell products that contain hazardous materials, sell products to children (subject to CPSIA regulations), operate a food business, or sell products that require professional licensing (like supplements or health products), check your state's business licensing portal for additional requirements. The SBA's business license and permit tool at SBA.gov helps identify state-specific requirements based on your industry and location.
County and City Licenses
Most counties and cities require a general business license, sometimes called a business tax certificate or occupancy tax certificate, for any business operating within their jurisdiction. This includes home-based businesses. The license typically costs $25 to $200 per year, and the application asks basic questions about your business type, location, and expected revenue. Some jurisdictions base the license fee on your gross revenue, with higher-revenue businesses paying more.
To find your local requirements, search for "[your city name] business license" or call your city clerk's office. Many cities have online portals where you can apply, pay, and receive your license digitally. If you operate in an unincorporated area (outside city limits), you may only need a county-level license. Some rural counties do not require business licenses at all for home-based businesses with no employees and no customer foot traffic.
Zoning regulations are a related concern. Your local zoning code determines what types of businesses can operate in residential versus commercial zones. Most residential zones allow home-based businesses with restrictions: no customer visits, no employees reporting to the home, no signage, no increased traffic, no hazardous materials, and no noise or nuisance to neighbors. An ecommerce business that ships products from a spare bedroom typically meets these requirements. A business that stores pallets of inventory in the garage, has delivery trucks arriving daily, and employs two people in the living room probably does not. If your business exceeds residential zoning limits, you may need a variance, a conditional use permit, or a commercial location.
Home Occupation Permits
If you run your business from home, many cities require a home occupation permit in addition to (or instead of) a general business license. The home occupation permit specifically authorizes you to conduct business from a residential address. Typical restrictions include: the business must be incidental to the residential use of the property (usually limited to 25% to 50% of the home's floor space), no exterior signage, no alteration of the home's residential character, no customer or client visits beyond a limited number per day, no employees who are not household residents, and no activities that generate noise, odor, traffic, or parking problems beyond normal residential levels.
Home occupation permits cost $25 to $100 in most jurisdictions and are renewed annually. The application process is usually straightforward: fill out a form describing your business activities, confirm you meet the restrictions, and pay the fee. Approval takes a few days to a few weeks. In some jurisdictions, your neighbors may be notified and given a chance to object, though this is more common for businesses that involve client visits or unusual activities.
Renters face an additional consideration. Your landlord's approval may be required to operate a business from a rental property, and your lease may explicitly prohibit commercial activity. Check your lease before investing in a home-based business setup. If your lease prohibits it, negotiate with your landlord. Most landlords are fine with a quiet ecommerce business that ships packages from the apartment, as long as it does not damage the property, increase traffic, or violate building rules.
Industry-Specific Permits
Depending on what you sell, you may need additional permits beyond the general and sales tax licenses. Food and beverage sellers typically need a food handler's permit or food establishment license from the local health department, which involves an inspection of your preparation area and compliance with food safety standards. Cosmetics and personal care product sellers must comply with FDA labeling requirements and may need state-level cosmetics registration in certain states. Products sold to children under 12 must comply with CPSIA (Consumer Product Safety Improvement Act) testing and certification requirements, which can cost $500 to $5,000 per product depending on the testing needed.
If you import products from overseas, you may need an importer of record number and must comply with US Customs and Border Protection requirements. Our import regulations guide and customs and duties guide cover these requirements in detail. If you sell products that use or contain regulated chemicals (cleaning products, certain paints, some crafting supplies), check whether your state requires additional environmental or safety permits.
How to Find Every License You Need
The challenge with business licensing is that no single source lists every requirement for every jurisdiction. Requirements are split across federal, state, county, and city agencies, each with their own websites, forms, and processes. The most reliable approach is to check each level systematically. Start with the SBA's business license and permit lookup tool, which identifies federal and state requirements based on your business type and location. Then visit your state's department of revenue for sales tax registration, your city or county clerk's website for general business license requirements, and your city's zoning department if you operate from home.
When in doubt, call the office directly. City clerks and county business license offices are generally helpful and can tell you exactly what permits you need within their jurisdiction. Ask specifically whether there are any industry-specific permits for your business type, since the general business license application may not flag these automatically. Better to spend 30 minutes on the phone now than to discover a missing permit during a customer complaint, a tax audit, or a visit from an inspector.
Renewal and Compliance
Most business licenses must be renewed annually. Set calendar reminders for every renewal date, since operating with an expired license can result in fines and may affect your insurance coverage. Some jurisdictions automatically send renewal notices; others do not. Keep a master list of every license and permit your business holds, including the issuing agency, the renewal date, the cost, and the account or login information for online portals. As your business grows, you may need to update your licenses to reflect changes in revenue, location, business activities, or the number of employees.