Understanding Business Licenses and Permits
Before any business venture, you’ll want to familiarize yourself with licensing requirements. Knowing the small business licenses you may need to obtain before your business starts operating could mean the difference between success and failure.
Penalties for failing to obtain permission from federal, state and local governments range from small fines to life-changing financial penalties or criminal prosecution. Failing to obtain the right permits will also prevent you from financing your business with a reputable bank.
Read on to learn about business activities that require small business permits and licenses from the federal government. Later in the post, you’ll also learn how to determine which states require what permits.
Federal Small Business Licenses and Permits
There is a relatively small number of business activities that are directly supervised by federal agencies. However, if your business engages in any activities that are federally supervised, it’s likely you’ll need a federal license or permit.
As you might imagine, federal licenses and permits are generally more complicated to obtain. Much of these business licenses and permits have application requirements concerning safety and environmental responsibility for the entire nation.
We’ll overview the permitting and licensing requirements for a few industries (and the federal agencies that regulate them) to give you an idea of what to expect.
Aviation —Federal Aviation Administration (FAA)
Airlines are required to obtain (among other permits):
- Airmen certifications and ratings for pilots and mechanics
- Aircraft certifications and ratings
- Airline and airport certifications
Even if you’re not operating an airline, you’ll need to be licensed just to do mechanical work on an aircraft.
Alcoholic Beverages —Alcohol and Tobacco Tax and Trade Bureau (TTB)
Requirements vary depending on the type of business you operate. The TTB website recommends reading the business descriptions to see what your business falls under so you can figure out what paperwork you need to file. The types of business include:
- Alcohol Producers and Manufacturers
- Alcohol Importers, Wholesalers and Exporters
- Alcohol Users and Dealers
Radio and Television Broadcasting —The Federal Communications Commission (FCC)
Requirements vary for amateur radio services, commercial radio operators, radio and television broadcasters, wireless service providers and more.
Radio broadcasting permits are in high demand and there is no guarantee you’ll receive authorization. If there is no frequency available that won’t interfere with existing stations, you’ll be denied.
This detail highlights how important it can be to review federal regulations for a specific activity. If you didn’t know there’d be no frequency available early on, you might waste a significant investment of time and resources on setting up, only to be denied space on the radio.
Other industries that require small business permits and the agencies that govern them are:
- Fish and Wildlife—S. Fish and Wildlife Service
- Commercial Fisheries—NOAA Fisheries Service
- Mining and Drilling—Bureau of Safety and Environmental Enforcement
- Transportation and Logistics—S. Department of Transportation
- Agriculture—S. Department of Agriculture (USDA)
Finding State and Local Small Business Licenses and Permits
State requirements vary from state to state and often there are licensing and permitting requirements down to the county and city level.
The quickest way to figure out what type of business licenses or permit you’ll need is by visiting the state business license offices. The U.S. Small Business Administration provides a comprehensive list of licensing offices for each state.
To learn about city and county requirements, you’ll need to go to the city or county website. Generally, there will be a section for business that will provide information about business licensing. Alternatively, you could get in touch with your local chamber of commerce for more information.
It’s also important to keep in mind that even if you’ve applied for and received federal permission for your business activities, you may still have state and local regulations to comply with.
For example, if you operate a business that sells alcohol, you’ll need permission from your local Alcohol Beverage Control Board, in addition to obtaining federal permits from the Alcohol Tobacco Tax and Trade Bureau.
All these regulatory requirements may seem overwhelming, especially as a small business owner who is already spread thin. But failing to get the right paperwork filed has consequences that are much worse than the temporary headache of filing applications. It’s essential to know not only what permits and licenses you need, but also to stay up-to-date with the constantly changing regulatory environment.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.