Starting and operating a business legally requires obtaining the proper permits, licenses, and registrations. The exact requirements vary based on your industry, location, and business structure. Use this checklist to ensure compliance at the federal, state, and local levels.
1. Federal Requirements
Employer Identification Number (EIN)
Any business with employees or operating as an LLC, partnership, or corporation must obtain an EIN. This unique number is used for tax filings, opening a business bank account, and hiring employees. Apply for free through the IRS website, and receive your EIN immediately upon completion if applying online. Paper applications may take up to four weeks for processing.
Business Tax Registrations
You must register your business with the IRS to comply with federal tax obligations. This includes federal income tax, payroll tax (for businesses with employees), and excise tax if your business deals in regulated goods or services. Visit the IRS website to determine which tax registrations apply to your business and to complete the necessary filings.
Industry-Specific Federal Licenses
These are required for businesses in regulated industries such as:
- Alcohol and tobacco (Alcohol and Tobacco Tax and Trade Bureau)
- Transportation and logistics (Department of Transportation)
- Financial services (Securities and Exchange Commission)
- Broadcasting (Federal Communications Commission)
- Healthcare (Food and Drug Administration, Drug Enforcement Administration)
2. State Requirements
Business Entity Registration
Register your business with the state’s Secretary of State if forming an LLC, corporation, or partnership. This process establishes your business as a legal entity and ensures compliance with state regulations. You’ll need to file formation documents such as Articles of Organization (for LLCs) or Articles of Incorporation (for corporations) and pay the required filing fees. Some states may also require an operating agreement or corporate bylaws.
State Tax Registrations
- Sales Tax Permit: Required if you sell taxable goods or services; register with your state’s Department of Revenue.
- State Employer Tax Registration: Necessary if you have employees; covers payroll withholding and state unemployment taxes.
- Franchise Tax Registration: Some states require this for LLCs and corporations; verify with your state’s tax agency.
Professional and Occupational Licenses
Certain professions require specific state-issued licenses to operate legally. These licenses ensure that professionals meet education, experience, and regulatory requirements. You may need to pass exams, obtain certifications, or complete continuing education courses to maintain your license.
- Financial & Legal Services: Accountants, attorneys, financial advisors
- Healthcare & Wellness: Doctors, nurses, chiropractors, physical therapists, pharmacists
- Real Estate & Property: Real estate agents, brokers, property managers, appraisers
- Skilled Trades & Construction: General contractors, electricians, plumbers, HVAC technicians
- Personal Care Services: Cosmetologists, barbers, tattoo artists, massage therapists
- Education & Childcare: Teachers, daycare providers, tutors, private school operators
Check your state’s licensing board to confirm specific requirements and renewal obligations.
3. Local Requirements
Business License
You must obtain a general business license from the city or county where your business operates. This license grants you legal permission to conduct business within that jurisdiction. Requirements and fees vary, so check with your local government office or business licensing agency to ensure compliance.
Zoning and Land Use Permits
- Ensure your business location complies with local zoning laws, whether it’s a commercial property or a home-based business.
- Check zoning restrictions to confirm that your business type is permitted in your chosen area.
- Apply for rezoning or special use permits if your business does not conform to current zoning regulations.
- Verify parking, signage, and operational hour restrictions imposed by zoning laws.
- Contact your local planning or zoning office to review compliance requirements before signing a lease or purchasing property.
Health and Safety Permits
- Food service businesses must pass a health department inspection and obtain a food service license before operating.
- Businesses handling hazardous materials need environmental permits to comply with local, state, and federal regulations.
- Fire safety inspections are mandatory for brick-and-mortar locations, ensuring compliance with fire codes, sprinkler systems, and emergency exits.
Signage Permit
You must obtain approval for exterior business signs from your local planning or zoning department. Many municipalities have regulations on sign size, placement, lighting, and materials to maintain visual consistency and safety. Check local ordinances before designing or installing any signage to avoid fines or the need for costly modifications.
Home-Based Business Permit
Most cities and counties require a home-based business permit for businesses operating from a residence. This ensures compliance with zoning laws and prevents disruptions to residential neighborhoods. Check with your local government for specific restrictions on signage, customer visits, and operating hours.
4. Additional Considerations
DBA (Doing Business As) Registration
If you operate under a name different from your legal business name, you must register a DBA (Doing Business As). This ensures legal recognition and allows you to open business bank accounts and sign contracts under your trade name. Check with your state or county clerk’s office for specific registration requirements and renewal processes.
Seller’s Permit
If your business sells tangible goods, you must obtain a seller’s permit to collect and remit sales tax. This permit is issued by your state’s Department of Revenue and is required for both online and physical storefronts. Some states also require periodic sales tax filings, so check your state’s guidelines to stay compliant.
Liquor, Tobacco, or Cannabis License
If your business sells alcohol, tobacco, or cannabis products, you must obtain the appropriate licenses from state and local agencies. These licenses regulate sales, ensure compliance with health and safety laws, and prevent illegal distribution. Requirements vary by location, so check with your state’s alcohol or cannabis control board for specific application procedures, fees, and renewal processes.
Permits for Special Events
If your business hosts public events, pop-up shops, or outdoor sales, you may need a special event permit. This ensures compliance with safety, zoning, and health regulations. Check with your local government to determine if you need additional approvals for noise, alcohol sales, street closures, or crowd control measures.
Final Steps
Research specific requirements for your industry and location by checking federal, state, and local government websites. Contact industry associations or licensing boards for additional guidance and updates on compliance changes.
To stay compliant and avoid fines, follow these key steps:
- Track renewals: Set reminders to renew permits and licenses before expiration.
- Monitor regulatory changes: Regularly review updates to local, state, and federal requirements.
- Consult experts: Work with legal or business professionals when expanding or modifying your business structure.
- Verify compliance: Check with the appropriate agencies to confirm you have all necessary permits before launching or growing your business.
By securing the appropriate permits, licenses, and registrations, you protect your business from fines, legal issues, and operational delays. Always verify requirements with local and state agencies before making significant business decisions.
Not sure if you're the bottleneck? Find out in 2 minutes →
