Decide & Register
State and Local Business Licenses: What You Actually Need
Short answer
Three layers: (1) state professional license if your trade requires it (contractor, electrician, plumber, HVAC, beautician), (2) city or county business license to operate at your address, (3) sales tax permit if you sell taxable goods or services. Each layer is checked separately — getting one doesn't satisfy the others.
License requirements vary by state and city, but the three-layer framework is universal. Use it to figure out what you need without going down rabbit holes.
Layer-by-layer checklist
- Layer 1 — State professional license: search '[state] + [your trade] licensing board'. Required for licensed trades; usually involves an exam and proof of experience.
- Layer 2 — Local business license: search '[city or county] business license application'. Usually $25–$200/year, sometimes flat, sometimes based on revenue.
- Layer 3 — Sales tax permit: search '[state] sales tax permit' or 'seller's permit'. Free in most states. Required if you sell anything taxable.
- Optional layer 4 — DBA (doing business as): file with the county if you operate under a name different from your legal name or LLC.
Order to do them in
- Form your entity (LLC or stay sole prop) and get your EIN first — both layers below ask for them.
- Apply for state professional license if required. This often takes weeks.
- Apply for local business license at your city or county clerk.
- Register for sales tax with your state Department of Revenue.
- Keep digital copies of every license in one folder. Renewals creep up.
Frequently asked questions
Can I work while waiting for a license?
Usually no — operating without a required license can void contracts and trigger fines. Working without a contractor's license is a misdemeanor in most states.
Invoice from day one.
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Sources & further reading
Primary sources we consulted when writing and reviewing this guide.