Why You Need a Business License

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Once you have successfully formed your new company, there are still formalities and registration processes that you will need to address before you can legally conduct business. These tasks include securing a variety of licenses and permits, as well as ensuring that you are compliant with other miscellaneous regulations. Read ahead for information that will help you ensure that your business is properly prepared to begin daily operations.

Do I need a business license?

Most businesses will need to obtain at least one license before they can legally begin their normal daily operations. Depending upon the industry, several licenses may be required. These licenses can come from either the state, federal, or local government, but they are important regardless of which agency issues the license.

Federal licenses

Federal licenses are usually only imposed by the SEC (Securities and Exchange Commission) on large, publicly traded companies. Certain federal bureaus may require smaller organizations that deal in highly regulated products (e.g. alcohol, tobacco, or firearms) to be licensed. Since these licenses typically come from large, well-funded governmental agencies, they are often monitored very closely; businesses that fail to maintain registration are identified fairly quickly.

State licenses

Many states also require specific licenses that only apply to certain types of organizations. Many service businesses (and their employees) need state-level licenses in order to legally operate. These licenses ensure that professionals and organizations in certain industries are observing all necessary certification and training requirements. These types of licenses are required of businesses operating in the medical industry, food service industry and cosmetology-related industries. Retail outlets in most states must also acquire a state sales tax license to operate.

At the local level, necessary licenses can vary greatly even among different regions of one particular state. They may also be required at both the county and municipality level. These types of licenses typically include local tax licenses, as well as standard general business license.

Other business license considerations


Permits are different from licenses in that they signify your organization’s compliance with a specific local ordinance. Their purpose is to ensure that your business is operating safely and in accordance with community regulations. Common forms of permits are local health department permits (imposed on all food preparation related companies), signage permits, and fire department safety permits.

Zoning laws

Several businesses are also subject to zoning restrictions, which are designed to restrict specific types of organizations from operating in certain areas. Zoning problems are typically only an issue for businesses that offer what could be loosely defined as “vices” (e.g. liquor and tobacco shops, firearm dealers, or night clubs), which generate a great deal of pollution or noise. Home-based companies are also restricted in certain communities. The reason for this is to restrict certain activities from occurring in areas where they could likely interfere with the public good.

Miscellaneous considerations

There are also a few hard-to-classify formal requirements that some businesses must address. Most businesses must file for a federal tax identification number (also referred to as an employer identification number and abbreviated “EIN”). An EIN operates similarly to a personal Social Security Number, and assists in the payroll tax filing process. Many states also require businesses to file for a state tax identification number as well.  

Also, most sole proprietorships and general partnerships eventually find it necessary to take on a fictitious business name, (also called a  “doing business as”, and abbreviated “DBA”).  Many financial institutions require a formal DBA before opening accounts. A DBA also allows the business to conduct itself as something other than the owner’s personal name.

How to get a business license?

Before you begin to operate your business, you should do an exhaustive search to make sure that you’re aware of all requirements on your business. Be sure to check all levels of government in the location your business is registered and operating, as well as all organizations (both federal and private) that oversee your specific industries.

One way to efficiently manage this search is to hire a professional agency, like Swyft Filings, to complete this for you. They will be able to use their existing contacts to quickly compile this information. Contact one of our business experts today!

Originally published on October 24, 2022, and last edited on March 20, 2023.

Frequently Asked Questions

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How much does it cost to form a corporation or LLC?

You can form a corporation or LLC with our help for as little as $0, plus state filing fees for incorporation. Filing fees vary depending on the state you incorporate in. For more information on specific states, check out our state guides on the Swyft Resource Center. You can also email us with specific questions or contact us at 877-777-0450.

What payment methods do you accept?

Swyft Filings accepts payment through Visa, MasterCard, American Express, PayPal, checks, and money orders. You can send any questions about payment to our email address or contact us at 877-777-0450.

Will I have to pay additional fees to Swyft Filings after completing my order?

It depends on what you ordered. If all you did was file your corporation or LLC, the price you paid when ordering is all you pay. You will have no further fees after that.

However, if you signed up for the Swyft Filings Registered Agent Service, you will be charged its initial fee three days after you place your order. From then on, you will be charged according to the terms of your subscription until you change your registered agent with the state or dissolve your company. If you change your agent or dissolve your company on your own, let us know so we can discontinue billing.

Other potential subscription-based options include SnapMailbox, 360 Legal Forms, and ComplianceGuard. If you opt for SnapMailbox or 360 Legal Forms, you will be charged a monthly fee after their respective 30-day free trials end. ComplianceGuard has an annual fee after a 14-day free trial. All three of these services are completely optional.

When will my order be processed?

Our team processes all Standard orders on a first come, first served basis. If you opt for Express or Same-Day Processing, we prioritize your order and send it to the front of the line. However, no matter how fast we get it out the door, you’ll still have to wait for your state to address your filing.

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