What Licenses Do I Need to Start a Business?

Starting a business is often the culmination of a long journey that also involves bureaucratic obstacles. One of the fundamental steps for a company is obtaining the commercial licenses necessary to carry out its activities in the relevant sector. 

The requirements to apply for obtaining a business license vary from jurisdiction to jurisdiction and even from sector to sector. 

The ultimate goal is therefore to ensure legislative, fiscal, and sectoral compliance (minimum standards) while also respecting transparency and good governance. 

For this reason, in this article, we will answer the fateful question “what licenses do I need to start a business?” by specifically analyzing the critical issues involved in obtaining them, the timing, and the regulatory complexity surrounding them.

Understanding Business Licenses

A business license is an authorization issued by a public body that allows a specific commercial activity to be carried out under the needed conditions. Entrepreneurs often wonder what licenses do I need to start a business when approaching this stage, since the requirements can vary significantly by sector and jurisdiction. Licenses can be general (permission to operate within a city or region) or specific to a sector (food handling, construction, financial services). Some sectors also require professional or occupational credentials for the people who manage or provide the services.

Their purpose is to legalize the activity: in this way, consumers and business partners can be sure of the company’s activity. At the same time, authorities can monitor safety, health, environmental standards, and fiscal transparency.

Common Licenses Required to Start a Business

In this section, we will examine the various types of licenses and authorizations that characterize the current landscape.

General Business License

Many jurisdictions require a general business or “trading” license prior to opening. You must submit your business name, registered address, property, asset description, and tax numbers. Renewals are typically annual or biennial, with rates proportional to turnover, location, or number of employees. Keep records of renewals together with the calendar of annual reports to avoid deadlines; new entrepreneurs often also wonder what is an annual report when managing compliance for the first time.

Professional and Occupational Licenses

Professions such as healthcare, legal, engineering, financial consultancy, or architecture often require individual professionals to hold a professional license and undergo ongoing training. Professional associations or ministries supervise ethics, scope of competence, and complaints, and may suspend or revoke privileges in the event of non-compliance. Check both the license on a personal level and any authorizations from the facilities where the services are provided.

Industry‑Specific Licenses

Sectoral regulations vary greatly. Examples include permits for catering, licences for alcohol, contractor registration, transport permits, and authorizations for tobacco retail sales. In some countries, additional authorizations are required for radio and television broadcasting, gambling, or environmental impact. Adapt the permit to the specific activity (for example, wholesale alcohol service; on-site vs. online).

What Licenses Do I Need to Start a Small Business?

Small businesses follow the same lawful logic as large businesses, but with more interaction at the local level. Home-based businesses may need a home-based business permit, a zoning approval, a sign authorization if the sign is visible, and, if they sell goods, a sales tax registration, where applicable. 

Keep paperwork simple and centralized; set renewal reminders to coincide with insurance and tax deadlines, and verify whether your business license requires additional insurance coverage depending on the activity. This section answers the common question of what licenses do I need to start a small business without referring to any single country’s regulations.

Federal, State, and Local Licensing Requirements

Licensing occurs at multiple levels.

• Federal or national level. Some activities are regulated at the national level (e.g., aviation, broadcasting, wildlife import/export, alcohol production, and firearms). If your business falls under the jurisdiction of a federal agency, you may need a federal permit in addition to local permits.
• State or regional level. Business registration, professional licenses, and sales tax administration are commonly handled at the state or provincial level. Specific industry departments (health, agriculture, environment) are likely to issue additional permits.
• Local level (city/municipality). Zoning, construction work, signage, and opening hours are typically local responsibilities. Municipalities may require a general operating license even if you have state registration.

Additional Permits That May Be Required

There are also some additional permits required by the authorities or by the specific sector in which you operate. Here are some examples:

• Zoning and land use approvals. These are authorizations that regulate land use in a given area and verify that the intended use of the land (residential, industrial, or commercial) aligns with the company’s activities.
• Health and safety permits. These certifications ensure compliance with safety standards for both customers and employees. Authorities require them for activities involving food preparation, public gatherings, hazardous substances, insurance, or regulated equipment.
• Environmental permits. Regulators require these authorizations for all activities that affect air and soil quality or generate waste that needs to be disposed of. In the US, for example, the criteria are very strict and are regulated by the EPA (Environmental Protection Agency). In the European Union, on the other hand, the rules are governed by EU directives such as the IPPC (Integrated Pollution Prevention and Control).

The Importance of Compliance with Licensing Laws

Operating without the necessary certifications and licenses exposes the company to non-trivial risks. First of all, it places the business in a situation of regulatory illegality with the consequent risk of sanctions and even criminal proceedings. Secondly, it does not allow companies to access public or private contracts, as regulatory compliance is always required.

However, sanctions vary depending on the jurisdiction and sector, but generally range from administrative fines to the possible closure of the business. 

Possessing a license is therefore not just a lawful obligation, but rather a signal of trust towards partners and customers. 

Global Perspective on Business Licensing

Regulatory frameworks vary from country to country. Some governments centralise their search for licences through dedicated portals (for example, in the UK), while others rely on a combination of national agencies and local councils. In federal systems, national rules coexist with state/provincial and municipal requirements.

For cross-border operations, assess the risk of permanent establishment, consumer protection laws, data rules, and industry regulators, together with basic licensing; entrepreneurs often also ask what is foreign qualification when expanding abroad. If there is any ambiguity, contact a local legal advisor or a business formation consulting firm to clarify requirements and ensure compliance.

FAQs

What licenses do I need to start a business?

Almost all jurisdictions require a general commercial license, trade license, or tax license, which legally authorizes the business to operate in a given territory. Additionally, highly regulated sectors require industry-specific permits.

What licenses do I need to start a small business?

Usually the same licenses plus local ones: home occupation/zoning (where applicable), signage, fire/health in customer-facing locations, and any industry licenses.

What license do I need to start a business from home?

Zoning verification + home occupancy permit, with limits on customer visits, deliveries, signage, and storage; additional approvals for food, childcare/health, or hazardous materials.

Do online businesses need licenses?

Yes, because it is not the channel but the activity that requires permits. In many jurisdictions, a general commercial license or equivalent, a VAT/Sales Tax permit, and even Industry-Specific Permits are required if the sector requires them (e.g., alcohol, tobacco, drugs, supplements, cosmetics).

How much does it cost to get a business license?

The country in which the business operates largely determines the cost. In the United States, for example, a general commercial license can cost between $50 and $400 per year, while in Europe, some local licenses require €100–€500.

What happens if I start a business without a license?

The most common consequence is receiving fines ranging from a few hundred to thousands of dollars/euros. In more serious cases, the authorities may also order the immediate closure of the business.

References

ZenBusiness. (2025, July 23). Business license costs by state. 

https://www.zenbusiness.com/business-license-costs

BoostSuite. (2025, May 15). How much a business license costs by business type. 

https://boostsuite.com/business-license-cost-states/

CorpNet. (2025, August 12). What happens if a business operates without licenses/permits. 

https://www.corpnet.com/blog/business-operates-without-licenses-permits/

What Happens if a Business Operates Without the Necessary Licenses or Permits?