Business Permit: What Is It?

A Business Permit is a government-issued authorization to operate a business within that government’s jurisdiction (its geographic territory) and in compliance with its laws. Most businesses will require a basic operating permit from the city or town in which it is physically located, even if the business is home-based or owned by one person, or if it sells goods and services exclusively online.

State and Federal authorities can also require Business Permits to comply with certain specialized laws (for example, if your business uses regulated hazardous materials or provides certain regulated professional services like cosmetology).

The specific permits will depend on the business's location, ownership structure (sole proprietorship, partnership, corporation or limited liability company) and activities.

Why Is a Business Permit Important?

Governments require Business Permits for three major reasons:

  • To protect the public from fraud, defective products and incompetent services by enabling the authorities (including courts and consumer protection agencies) to identify the people running the businesses;

  • To enable local, state and Federal governmental authorities to monitor business activities and transactions that are subject to taxation (and to help them collect those taxes);

  • To ensure compliance with the zoning laws that limit which activities can be conducted in any given geographic area.

Businesses that sell products and services to the general public often require more permits.

Reasons to Consider Not Obtaining a Business Permit:

  • Your business is still in the planning or pre-launch stage or has not yet sold products or provided services to any customers.

  • The activities are more like a hobby than a business – for example, you engage in the activities on an irregular basis and don’t generate more than a nominal amount of profit.

Reasons to Consider Obtaining a Business Permit:

  • To ensure that your business complies with the law and isn’t subject to fines, penalties or closure for non-compliance.

  • To enable your business to enforce contracts against third parties and to make claims or pursue remedies in courts or governmental agencies (unauthorized businesses are often prohibited from seeking assistance from courts or governmental bodies).

Steps to Obtain a Business Permit

  1. Contact your town’s business license, tax and zoning offices to find out what Business Permits your business may need.

  2. Contact your state tax authorities to find out if you need a sales tax permit or other state license.

  3. Fill out and submit the required forms, and keep track of the dates the permits need to be renewed.

  4. If you suspect your particular business may have complicated permit or licensing issues, engage a reputable, experienced business lawyer.

Support for Business Permits

If you need help determining whether you need a business permit and/or obtaining a business permit, post your legal need on UpCounsel's marketplace. UpCounsel screens out 95% of lawyers to provide only the best lawyers from top law schools like Harvard Law School or Yale Law School. UpCounsel lawyers have an average of 14 years of experience.