Small Business Licensing, Permits, and Regulations: What You Need to Know
Post #23: As an aspiring or new business owner, be sure to get the licenses or permits needed to operate legally in your county or city.
In this Substack, I will walk you through the process of starting, operating, maintaining, and — if needed — selling or closing your own small business.
Today, I am going to cover business licenses, permits, and regulations for operating your business legally within your county or city, including:
Why you may need to get a license or permit to operate legally
A list of the types of licenses and permits you may need
How to check whether you need to get any licenses or permits
The risks of operating without a required license or permit (non-compliance)
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(Take a Deep Breath…)
Starting a business is exciting!
You're building something from the ground up, bringing an idea to life, and (hopefully) making money doing something you love.
And its all YOURS.
But, before you dive in too deep, it's crucial to understand the legal side of being a business owner - especially when it comes to licenses, permits, and regulations.
Ignoring these can lead to fines, penalties, or even getting shut down.
The good news?
It’s not as overwhelming as it sounds if you take a deep breath and handle this minor obstacle one step at a time.
Why Business Licensing and Permits Matter
Licenses and permits ensure that your business operates legally, protects consumers, and complies with industry standards.
For example:
If you want to start a bakery in your home to supply yummy sourdough bread to your neighbors (and maybe sell a few loaves at the local farmers market once a week), you will need to be sure that your kitchen meets consumer food safety guidelines.
If you want to be a life coach and support your clients in person from a home office, you may need to check with your HOA to see whether you can run your business from your home or if you will need to get a space elsewhere (if it is not allowed by the HOA).
If you want to leave your employer and go solo as a contract plumber or electrician, you will need to ensure that you have completed all of the required training, certifications, and licensing needed to operate as an independent contractor because there are laws protecting home owners from shoddy work that could lead to flooding or electrical fires.
The main purpose of licenses and permits (through federal, state, or local regulations) is to protect customers from hacks, thieves, quacks, and otherwise unprofessional or bad actors.
Common Licenses and Permits You May Need
It would be impossible for me to list all of the licenses, permits, and regulations for every possible circumstance or business type.
Instead, here is a list of the general types of licenses and permits that you should consider as part of your business plan and operational strategy.
💡 Tip: specific requirements vary depending on your location, industry, and the type of business you're running.
1. General Business License
Overview
Every city or county may require a general business license to legally operate within its jurisdiction. This ensures businesses comply with local regulations and pay any required local fees.
A general business license is different from registering your business entity with the Secretary of State. The Secretary of State registration establishes your legal business structure (LLC, corporation, etc.), while the general business license grants permission to operate in a specific city or county.
Purpose
This type of license is intended to ensure that businesses comply with local regulations, zoning laws, and tax collection requirements within a specific city or county.
They also help local governments track businesses and maintain fair competition.
What to Do
Check with your local city or county clerk’s office to determine if you need one.
2. State-Specific Licenses
Overview
Certain industries and professions require state-level licenses to operate legally, ensuring that businesses meet specific industry regulations.
Professions like contractors, real estate agents, and medical professionals often require state-specific licensing.
Purpose
Sate-Specific licenses are designed to enforce industry-specific standards and regulations at the state level.
These licenses help maintain professional accountability and ensure businesses meet safety, ethical, or consumer protection requirements.
What to Do
Your state’s business regulatory agency or licensing board will have details on what is required.
3. Professional or Occupational Licenses
Overview
If your business involves a profession that requires expertise or specialized training, you may need a professional or occupational license.
Industries such as accounting, law, healthcare, and cosmetology typically require these licenses.
Purpose
Professional or occupational licenses protect consumers from unqualified or unethical professionals by ensuring individuals have proper training, experience, and credentials.
What to Do
Check with the appropriate professional board in your state for licensing requirements.
4. Sales Tax Permit (Reseller Certificate)
Overview
If your business sells physical products, a sales tax permit allows you to collect and remit sales tax legally.
This permit is issued by your state’s department of revenue and is often required for retailers, wholesalers, and e-commerce businesses.
Purpose
Sales tax permits allow businesses to legally collect and remit sales tax, ensuring compliance with state tax laws and preventing tax evasion.
It also enables businesses to purchase wholesale goods tax-free if they intend to resell them.
What to Do
Some states also issue reseller certificates, which allow you to purchase goods tax-free for resale.
5. Federal Licenses (If Applicable)
Overview
Certain industries require federal licensing to comply with national regulations.
Businesses in agriculture, firearms, alcohol, aviation, transportation, and broadcasting may need federal approval.
Purpose
Federal licenses regulate businesses in industries that impact national security, safety, or commerce.
Federal oversight ensures compliance with nationwide laws
What to Do
The U.S. Small Business Administration (SBA) provides a list of federally regulated industries and their requirements.
6. Health Permits and Food Handling Licenses
Overview
Businesses that handle food or provide hospitality services need health permits to ensure public safety.
Purpose
Health permits and food handling licenses protect public health by ensuring businesses handling food or personal care services follow hygiene and safety regulations.
This helps prevent contamination, foodborne illnesses, and other health risks.
What to Do
Restaurants, food trucks, caterers, and grocery stores typically require permits from the local health department.
Food handlers may also need individual certifications to comply with food safety regulations.
7. Home-Based Business Permits
Overview
If you plan to run your business from home, you may need additional permits or approvals.
Local zoning laws may restrict certain types of businesses in residential areas.
Purpose
Home-based business permits ensure that residential businesses do not disrupt neighborhoods or violate zoning laws.
Some businesses may require special approvals if they involve increased traffic, signage, or certain types of operations.
What to Do
Some cities or counties require home-based businesses to obtain a special permit to operate legally.
8. Environmental Permits
Overview
Businesses that impact the environment may need special permits to ensure compliance with regulations.
Industries involving waste disposal, manufacturing, hazardous materials, or emissions typically require environmental permits.
Purpose
Environmental permits help minimize environmental harm by regulating businesses that produce waste, emissions, or hazardous materials.
These permits ensure compliance with environmental protection laws and sustainability efforts.
What to Do
The Environmental Protection Agency (EPA) and local environmental agencies provide guidelines and regulations.
9. Signage and Building Permits
Overview
If you have a physical storefront or office, you may need permits for signage or building modifications.
Many cities have regulations on the size, location, and type of business signage allowed.
Purpose
Signage and building permits maintain community aesthetics, safety, and structural integrity by regulating business signs and construction projects.
This prevents hazards, improper installations, and conflicts with zoning laws.
What to Do
Renovations or construction projects often require building permits from the local zoning or planning office.
Steps to Find Out What You Need
Check Your Local Government Website – Many city and county websites have business licensing information.
Use the SBA’s License and Permit Tool – The U.S. Small Business Administration (SBA) provides resources to identify federal, state, and local requirements.
Contact Your State’s Business Licensing Office – Most states have a department dedicated to business regulations.
Consult a Business Attorney or Accountant – Professionals can help ensure you’re in full compliance.
Risks of Non-Compliance
Failure to obtain the proper licenses and permits can result in fines, penalties, or even forced closure.
Additionally, non-compliance can hurt your reputation and make it difficult to scale your business later.
Navigating business licensing, permitting, and regulations may not be the most thrilling part of entrepreneurship, but it’s a necessary step to protect your business and set yourself up for long-term success.
To review:
Look up your city and state’s business licensing requirements.
Make a checklist of the permits you need.
Set a deadline to complete all necessary registrations.
By tackling licensing and compliance early, you can focus on growing your business without worrying about legal roadblocks.
Next Steps
In the next post I am going to cover business insurance!
Yay! 😀 Boo! ☹️ Eek! 😨
No worries - you got this.
👉 Continue the Journey with Post #24 —>
