Sales tax FAQ

Business licenses and permits FAQ

Before your business starts operating, you’ll probably need a business license. You may need several depending on your industry and location. Learn what’s required to get a business license.

Sales tax rates, rules, and regulations change frequently. Although we hope you'll find this information helpful, this page is for informational purposes only and does not provide legal or tax advice.

Licensing your business

A business license is a document provided by the government that permits your business to legally operate within a particular jurisdiction. There are many kinds of business licenses and permits that might be required depending on your type of business and where you conduct business.

If you’re starting a business, there’s a good chance you’ll need a business license to legally operate. Operating without a business license could get you in trouble. Potential penalties may include ceasing operations, fines, and, in some extreme cases, even jail time.

Identifying your need for a business license can depend on the type of business you’re running and where it’s located. Avalara License Guidance can help you quickly identify the licenses you need.

You may wonder if your sole proprietorship needs a business license. The answer is that it depends. Some states don’t require a business license for sole proprietorships; other states do.

Keep in mind that a city or county may require its own business license separate from the state. Check with your state to see if it requires a business license for your sole proprietorship.

Whether you need a business license to sell online comes down to what you sell and where you sell it. You may not need a business license if you sell on marketplaces like Amazon, eBay, or Etsy. However, a business license may be required in certain states, counties, towns, or cities.

Regardless of whether you need a business license, you’ll need to register to collect and remit sales tax if you start selling and making money online. Currently, all of the states with sales tax require online retailers to get either a seller’s permit or a sales and use tax permit. Read our state-by-state guide to marketplace facilitator laws to learn more.

If you need a license to sell on Etsy or Amazon depends on whether your store qualifies as a hobby or a business. This is defined by how much money you make and how much time you put into your store.

If you’re making a profit from your Etsy or Amazon store, then there’s a good chance you may need a license. It’s always best to check on the rules for your specific business.

Some states have a general business license, while licenses in other states are handled at the local level.

There may be additional licenses and permits required for your industry, city, town, or county. Check to make sure you have everything before you set up shop.

Getting your business license should be one of the first things you do when starting a business. Before you open your doors or launch your website, it’s critical you obtain the proper licenses to make sure you’re operating legally.

Because your business license requires your business name, it may make sense to form a limited liability company (LLC) or corporation first. Once you’ve done this, you’re ready to apply for your business license.

You may wonder what happens if you don’t have a business license. Operating a business without a business license can have serious consequences. At the very least, you’ll be asked to cease operations and have to pay a potentially hefty fine.

Always be sure to check on the business licenses you might need to avoid potential problems down the line.

No, an LLC is not the same as a business license. LLC stands for limited liability company, which is a type of business entity. A business license is a separate document that gives your company permission to operate within a particular jurisdiction.

Yes, sales tax licenses, seller’s permits, and sales tax permits are all different names for a permit that lets you collect sales tax for the state where you’re registered. They’re not to be confused with your business license, which permits you to operate in the jurisdiction where you’re licensed.

No. DBA stands for doing business as. It allows businesses to do business under a different name from your legal name (e.g., Jane’s Juice Bar instead of Jane Doe).

You may need a business license as an independent contractor. Whether you need one depends on the size of the job and where it’s performed. For example, contractors in North Carolina must get a license for projects costing more than $30,000. Check to see the rules in your state or town.

Like with other types of businesses, whether you need a business license to sell crafts has a lot to do with how big your business is and where you’re doing business.

Some states and/or cities may require a business license for you to sell crafts. Others may only require local licenses. Be sure to confirm which licenses are required in your area before you start selling.

Getting a business license

Once you know which licenses your business requires, it’s time to get the necessary documents together and apply for your business license. In many cases, you can apply for your business license online, although you may have to mail or fax your application to the relevant authority in some instances.

What types of business licenses you need depends on your type of business and where it’s located. Some businesses, like restaurants, hair salons, or tattoo parlors, are more complicated than others and require more licenses and permits than something like a traditional retail store would.

Determining what business licenses you need is important, but can also be time-consuming. This is especially true if you run one of the aforementioned businesses that require additional licenses. Avalara License Guidance can identify what business licenses you need starting at $99 per location.

Like your types of business licenses, how many business licenses you need depends on your business. Businesses in more complex industries may require more licenses and permits than others.

Learn more about some of the additional licenses businesses like convenience stores may need to operate.

The cost of a business license depends on the business and the state. A statewide business license could cost as little as a $25 application fee. Some licenses and permits, like a liquor license, could range in the hundreds or even thousands of dollars.

Where you get your business license may vary depending on your state or town. In many cases, you receive your business license from the state department of revenue. You can often file for your license online. For states without general statewide business licenses, you may need to obtain your license from your local city or county clerk of court.

Filing fees and other fees that come with getting a new business license are often tax deductible.

Managing your business licenses

You may wonder if your business license expires. The answer is that it depends on your business. Some business licenses remain active as long as your business is open and you meet your license requirements. Other business licenses must be renewed annually or at different intervals. 

Check on license requirements for your state to see if and when your license may expire.

When it’s time to renew or update your business license, you need to visit the revenue department for your state and follow the necessary renewal steps. Keep in mind the process may be different based on your state or county.

You can transfer a business license in some cases. However, keep in mind that transferring your business license may depend on your business and the laws of the jurisdiction in which your license was filed. 

In some cases, you may need to apply for a new business license under your new name whether you’re starting or taking over an existing business. Check with the relevant authority in your state to see if transferring your business license is allowed.

Yes, there is a good chance you’ll need additional licenses when expanding your business. The good news is that getting new licenses for expanding your business to a new state or city is a lot like when you got your business license the first time. Check with the state or town where you’re expanding to learn their rules about business licenses and what you need to do.

You can look up business licenses for any state on their secretary of state’s website.

No, you generally need to fill out a separate application for each business license and/or permit as well as each location. Some jurisdictions may allow you to operate in multiple locations from the same license.

You can get a copy of your business license from the government authority from which you received it. Visit the authority’s website to find and request a copy of your business license.

To cancel your business license, you first need to gather the necessary licenses and permits you want to cancel and identify the relevant agencies to contact. You’ll then need to contact the agencies and follow their procedures for canceling your license.

A business license number is different from your employer identification number (EIN). Your business license number (sometimes called a company license number) can be found on your business license and is part of what allows you to legally operate.

Your EIN (also called a tax ID) is a different number that the IRS uses to identify your business.

Simplifying licenses for your business

Identifying, finding, and applying for all your business licenses can be a complicated and time-consuming process. It can potentially take hours of your time that could be spent opening or growing your business. Thankfully, there are services to simplify and speed up the licensing process.

Avalara can help you learn which licenses your business needs and we can even help you apply!

Connect with Avalara for the answers you need to do tax compliance right.

Connect with Avalara for the answers you need to do tax compliance right.