Obtaining a Business License in the US

To obtain a business license in the US, you register your business entity with your state, apply for the specific operating license or permit your city or county requires for your activity, and, if your industry is federally regulated, file with the relevant federal agency. There is no single national "business license." Most small businesses need a combination of a state entity registration, a local general business license (sometimes called a business tax receipt), and one or more industry- or activity-specific permits. The full stack typically runs from under $100 to a few thousand dollars in fees and takes anywhere from a same-day online approval to several weeks, depending on your state, your county, and how regulated your trade is.

The licensing itself is rarely the expensive part. The cash strain usually comes from everything the license unlocks: buildout, equipment, first inventory, insurance, and payroll before revenue catches up. That is where financing decisions matter, and where getting the sequence wrong can tie up money you need to actually open the doors.

The three layers: federal, state, and local

Business licensing in the US stacks in three layers, and most operators need pieces from more than one. Treat it as a checklist, not a single form.

• Federal. Only specific activities are federally licensed, such as selling alcohol, tobacco, or firearms; commercial fishing; aviation; broadcasting; and transporting goods across state lines. If none of these describe you, you likely skip the federal layer entirely, apart from getting an EIN from the IRS.
• State. Nearly every business touches the state layer through entity registration (LLC, corporation, or a DBA for a sole proprietor), a state sales tax or seller's permit if you sell taxable goods, and any state-level professional or occupational license, common for contractors, cosmetologists, healthcare, and food service.
• Local (city and county). This is where most businesses get their actual general operating license, often called a business license, business tax receipt, or certificate of use. Zoning approval, signage permits, and health department permits also live here.

The order matters. Form the entity and get your EIN first, because the state and local applications will ask for both.

Step-by-step: how to get licensed

A clean sequence keeps you from paying for one step twice or getting stuck waiting on a prerequisite.

1. Choose and register your entity. File your LLC or corporation with the Secretary of State, or file a DBA if you are operating as a sole proprietor under a business name.
2. Get your EIN. Free from the IRS, usually issued instantly online. You need it for banking, payroll, and most licenses.
3. Register for state taxes. Apply for a sales tax permit or seller's permit through your state's Department of Revenue if you sell taxable goods or services.
4. Confirm zoning and location approval. Before signing a lease or applying locally, verify the address is zoned for your use. This single step derails more openings than any other.
5. Apply for your local general business license. Through the city or county, tied to your physical location or, for home-based businesses, a home-occupation permit.
6. Add industry-specific permits. Health permits, liquor licenses, contractor licenses, fire inspections, and professional licenses, as your trade requires.

If you are also mapping out how the business will be funded alongside licensing, our guide on business funding options for small businesses walks through how each stage of opening tends to get financed.

What it actually costs and how long it takes

Fees vary widely by state and municipality, so treat the figures below as realistic example ranges, not quotes. Renewal is easy to forget: most local licenses and state registrations renew annually or biennially, and lapsing one can trigger penalties or force a business to stop operating.

The pattern most operators feel: the fees are modest, but the waiting is not. A health inspection or liquor approval can sit for weeks while your lease, insurance, and payroll clocks are already running.

The hidden cost: cash flow during the licensing gap

Licensing rarely breaks a budget on fees alone. What breaks it is the gap between spending and revenue. You are often paying rent, deposits, insurance, buildout, equipment, and sometimes payroll while waiting on an inspection or permit that legally lets you open. During that window, money goes out and nothing comes in.

This is the point where operators either underestimate their runway or reach for the wrong kind of money. Traditional bank loans and SBA products are the cheapest capital available, but they underwrite on credit, time in business, and documentation, and they move slowly, often weeks to months. That timeline works fine for planned expansion. It works poorly when a permit finally clears and you need to fund inventory or a final buildout push in days, not months.

For that specific short-gap need, revenue-based financing through an MCA marketplace fills a different role, and it is worth understanding where it fits and where it does not.

Funding the opening: where revenue-based financing fits

Once a business is actually generating deposits, a revenue-based financing marketplace underwrites primarily on bank deposits and revenue rather than on credit score. That changes who qualifies and how fast. Approvals typically look at the last few months of business bank statements, with funding amounts commonly starting around $10,000, FICO thresholds as low as 500, and funding often landing within 24 to 48 hours of approval.

Instead of a fixed monthly loan payment, repayment is structured as a set share of future revenue, so it flexes with your deposits. That cash-flow-linked structure is the reason it works for a business that is open and taking money but hasn't stabilized yet. It is important to be clear-eyed: this is faster and more accessible capital, not cheaper capital, and approval is based on your revenue and deposit history, never guaranteed. It is a tool for a specific job, not a default.

A common real-world sequence: an operator opens on savings and a small line of credit, gets through the licensing gap, and then, once monthly deposits are consistent, uses a revenue-based advance to fund the next inventory cycle or a second location, repaying it as a slice of the sales that inventory generates.

Decision framework: which funding fits your licensing stage

Match the money to the moment. The wrong instrument at the wrong stage is how good businesses end up over-leveraged or underwater on timing.

Revenue-based / MCA marketplace works best when:

• You are already open and generating consistent bank deposits, and need capital fast, in days, to bridge a licensing-driven gap or fund inventory the moment a permit clears.
• Your credit is thin or below bank thresholds (FICO in the 500s) but your revenue is real and provable on statements.
• You need at least ~$10,000 and want repayment that flexes with sales rather than a fixed monthly obligation.
• Speed and approval odds matter more than getting the lowest possible cost of capital.

Avoid it / choose another path when:

• You are pre-revenue and still in the licensing phase with no deposits to underwrite. Lean on savings, a business credit card, a microloan, or an SBA product instead.
• The expense is small and predictable, like license fees themselves. Pay those out of pocket; they are not worth financing.
• You have time and strong credit. A bank term loan, line of credit, or SBA loan will be materially cheaper for planned, non-urgent spending.
• Your revenue is highly seasonal or thin, so a revenue share could squeeze an already tight cash position.

The honest rule of thumb: use the cheapest capital your timeline and credit can access, and reserve fast revenue-based financing for the moments when speed genuinely changes the outcome.

Common mistakes that cost operators money

A few licensing errors show up again and again in underwriting conversations, and each one has a cash consequence.

• Signing a lease before confirming zoning. You can be locked into rent for a location that will never get approved for your use.
• Missing the local layer. Owners register the LLC with the state, assume they are done, and skip the city business tax receipt, then get fined or shut down.
• Underbudgeting the timeline, not the fee. Planning for a $200 permit but not for the six weeks of carrying costs while it processes.
• Letting a license lapse. Renewal penalties and reinstatement fees usually exceed the original cost, and a lapsed license can freeze operations.
• Financing fixed license costs with revenue-based capital. Small, one-time, predictable fees should come from cash, not from a revenue share meant for growth spending.