PolyWiseWhat licenses does a small business need?
Updated October 21, 2026
What licenses a small business needs depends on its location, what it sells and whether it has employees. Most small businesses need a few licenses from different levels of government: a state registration to collect sales tax if you sell taxable goods or services, a local business license or tax certificate if your city or county requires one, and a professional or industry license if your work is regulated, such as food, alcohol, hair care, child care or construction. A few activities also need a federal license.
Federal business licenses
Most small businesses do not need a federal license. The U.S. Small Business Administration lists the activities that do, including selling alcohol, firearms, commercial fishing, aviation, broadcasting and some agriculture. If your business does none of these, your licenses will come from your state and local governments.
Separately, any business with employees, and every corporation or partnership, needs an Employer Identification Number (EIN) from the IRS. It is free and is used for taxes, not as a license.
State business licenses and registrations
Not every state has a general business license. North Carolina, for example, has none; owners register with the NC Department of Revenue for sales tax and get any industry license from the board that regulates their work.
- Business registration: an LLC or corporation registers with the Secretary of State. A sole proprietor using a name other than their own may need to file an assumed business name.
- Sales tax registration: if you sell taxable goods or services, you register with the state department of revenue before your first sale.
- Employer accounts: if you hire, you register for state income tax withholding and unemployment insurance.
- Professional and occupational licenses: state boards license trades such as cosmetology, barbering, electrical work, plumbing, general contracting, real estate and child care.
- Product licenses: some states license sellers of alcohol, tobacco, vapes or other regulated products.
Local business licenses and approvals
Many cities and counties require a general business license or tax certificate, and the rules vary from one town to the next. Before you open, the local planning or zoning office also needs to confirm your business is allowed at your address, which may mean a zoning approval or a certificate of occupancy. Food businesses also need a health permit from the local health department.
How to find the licenses your business needs
- Start with the SBA’s licenses and permits page, which links to each state’s business portal.
- Call your city or county business license office and the planning office, and ask what applies at your address.
- Check with the state board for your trade, if you have one.
- Ask your accountant or a local Small Business Development Center, which offers free advice.
Licenses change after you get them
Getting licensed is a one-time job, but the rules behind each license keep changing: renewal dates, fees, training requirements and which products need a license at all. PolyWise watches the agencies that license your business and sends a short alert when something changes.
Official sources
Common questions
Do I need a business license to sell online?
Often, yes. Selling online does not exempt you from your state’s sales tax registration or your city or county business license rules, which usually depend on where your business is based. Check with your state revenue department and your local business license office.
Do I need a business license for a home business?
Usually the same licenses apply as for any other business, and some towns also require a home occupation permit, especially if customers visit or you put up a sign. Ask your city or county planning office.
How much does a business license cost?
It depends on the place and the license. Local business licenses are often a flat fee or are based on revenue, and professional licenses have their own fees. Your city, county or licensing board lists the current fee.
Do business licenses expire?
Many do. Local business licenses often renew every year, and professional licenses renew on the board’s own cycle, sometimes with continuing education. Note each expiration date when you get the license.
PolyWise is not a law firm, and this guide is general information, not legal or tax advice. Confirm details with the relevant agency or a professional.