US Business Licences: Which Ones You Actually Need

Business Licence Last reviewed 2 September 2026 · 7 min read

Forming a company and being licensed to trade are two entirely separate things in the United States. Plenty of businesses complete the first, assume it covered the second, and operate for a year or two before discovering otherwise.

There is no single US business licence. Licensing runs in up to four layers, and which apply depends on what you do and where you do it.

Layer one: federal

Federal licensing is the narrowest layer, and most businesses need nothing at this level. It applies to specifically regulated activities — among them alcohol, firearms, aviation, broadcasting, commercial fishing, transport across state lines, and certain agricultural activities.

If you are selling software, consulting, or shipping ordinary consumer goods, this layer almost certainly does not apply to you.

Layer two: state

This is where most requirements live, and it varies enormously between states. Common state-level requirements include:

• A general business licence — some states require every business to hold one; many do not have such a thing at all.

• A seller's permit (sometimes called a sales tax permit or resale certificate) — required before you can lawfully collect sales tax. See our sales tax guide for when that obligation arises.

• Professional and occupational licences — accountancy, law, medicine, real estate, construction trades, cosmetology and many more. These are licences held by people, not companies, and they do not transfer across state lines.

• Foreign qualification — if your company is formed in one state but operating in another, the second state generally requires you to register there as a "foreign" entity. Foreign here means out-of-state, not out-of-country.

Layers three and four: county and city

This is the layer people forget entirely, and it is the one most likely to produce a letter.

Many cities require any business operating within their limits to hold a local business licence or business tax registration, regardless of any state licence. Counties frequently do the same for unincorporated areas. A business can be perfectly compliant at federal and state level and still be unlicensed where it actually operates.

Local requirements can also include zoning approval, health permits, fire inspection and signage permits, depending on the premises and the activity.

The registrations that are not licences

Two things are commonly mistaken for licences:

• Your formation documents. Registering an LLC with a state creates the entity. It does not authorise any particular activity.

• Your EIN. That is a federal tax identification number, nothing more.

A third worth knowing about is a DBA — "doing business as", also called a fictitious or trade name. If you trade under a name that is not your registered company name, most states require that name to be registered. It is not a licence either, but its absence causes practical problems: banks generally will not accept payments made out to an unregistered trading name.

If you are outside the US

An online business run from India, selling to US customers with no US premises and no US staff, usually has a light licensing footprint. The requirements that most often do apply are the seller's permit, where you have a sales tax obligation, and a local licence where the business has a genuine physical presence.

What changes the picture materially is inventory. Storing goods in a US warehouse can create both a tax presence and a licensing question in that state, and if a fulfilment provider distributes your stock across several states, so does that.

What happens if you skip it

Operating unlicensed rarely produces immediate consequences, which is exactly why it persists. What tends to happen instead:

• Back fees and penalties assessed for the whole unlicensed period once discovered.

• Loss of good standing with the state, which can stop you filing, banking or contracting normally.

• In some states, an unregistered out-of-state company being unable to bring a claim in that state's courts — you can be sued, but you cannot easily sue.

• Problems at exactly the wrong moment: due diligence, a bank review, or an insurance claim.

Licences expire

Nearly all of these renew, most annually, on schedules set independently by each authority. A business with a state licence, a city licence and a seller's permit has three separate renewal dates, and the reminders go to whatever address was on file when you registered — frequently your registered agent, rather than you.

Keeping one calendar of every registration and its renewal date is unglamorous and prevents most of the trouble in this guide.

Note: This guide is general information about US licensing. Requirements differ by state, county, city and industry, and they change. Please confirm what applies to your business before trading.