Business Licenses and Permits: Three Layers That Do Not Talk to Each Other

Updated August 7, 2026. Quick answer: licensing is three separate layers — federal, state, and local — and they do not talk to each other. Forming an LLC licenses nothing; a state business licence is not a city permit; and the federal layer only applies if your specific activity is federally regulated. The SBA states the division plainly: “Business activities regulated by a federal agency will need a federal license or permit”, while “The licenses and permits you need from the state, county, or city will depend on your business activities and business location.” There is no national lookup that answers this for you.

The three layers, and which one usually bites

Federal. Narrow, and it is about the activity rather than the size of the business — the SBA directs you to check with the relevant federal agency after reviewing its list of regulated activities. Most one-person service businesses touch none of them.

State. Broader. The SBA’s own framing is the useful one: “States tend to regulate a broader range of activities than the federal government.” This is where occupational and professional licensing lives, and where the answer genuinely differs from one state to the next for the same job.

Local. The layer that actually catches people, because it is the least visible. A city or county business licence, a home-occupation permit, a zoning sign-off, a health or fire inspection — none of which the state told you about when it accepted your formation filing.

Forming an entity is not a licence

This is the single most common misunderstanding in this area, and it is easy to see why: the formation filing arrives with a certificate, and a certificate looks like permission. It is not. Registering an LLC establishes that the entity exists; it says nothing about whether you may do the work. The two questions are answered by different offices, on different schedules, and one does not prompt the other. Whether you need the entity at all is a separate question again.

How to find your own requirements

The SBA is direct about there being no shortcut: “You’ll have to research your own state, county, and city regulations. Industry requirements often vary by state. Visit your Secretary of State’s website to find out which permits and licenses you need.”

1. Start at the SBA’s own page and read its table of federally regulated activities: Apply for licenses and permits. If nothing on it describes what you do, the federal layer is probably not yours.
2. Then your Secretary of State, for state registration and for whichever agency licenses your occupation.
3. Then your city and county by name — search for the city plus business license and the city plus home occupation permit, and use the government site rather than the aggregator that ranks above it.
4. Then your industry’s own regulator, if it has one, which is where the requirement most often turns out to be a person-level licence rather than a business-level one.

A note on the paid “licence search” services: the same pattern that sells EINs sells licence packages — a fee to look up public information and file public forms. The EIN version of this is the clearest case, because the IRS itself says never to pay for one.

Sources and limits

Quotations read 2026-08-07 from the US Small Business Administration, Apply for licenses and permits. We have not verified any individual state, county or city requirement, and this page deliberately does not list any — a national page that named specific local requirements would be wrong somewhere the day it published. The three-layer structure is what generalises; the contents of each layer do not.