A permit that allows a company to legally operate within a specific city, county, or state.
What is a Business License?
A business license is a government-issued authorization that allows a company to legally operate within a certain jurisdiction—typically at the city or county level, and sometimes at the state or federal level depending on the industry. Whether a business license is required depends on the type of business activity and its location.
Common examples include retail licenses, home occupation permits, food service licenses, and professional licenses. Even online businesses may need local licenses if they are based in a jurisdiction with such requirements. Operating without a required business license can result in fines, penalties, or forced closure.
E-commerce sellers may also be required to obtain a business license, depending on where they are located and where their products are stored or shipped from. For example, if an online seller uses fulfillment centers in certain states (such as through Amazon FBA), those states or local jurisdictions may require the seller to register and obtain a local license. Additionally, some cities require a home-based business permit even if all operations are online. It’s important for online businesses to check both local and state regulations to ensure full compliance.
It’s important to note that a business license is separate from company formation. Forming an LLC or corporation does not automatically grant the right to operate legally in a given location—you may still need a license. Some areas require annual renewals and may charge fees. Entrepreneurs should check with local authorities to ensure they meet all licensing obligations for their industry and location.
