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Business License and Permit Requirements
Like it or not, government regulation is a fact of life if you’re starting a new business. So, it’s crucial not to overlook federal, state, and local business license and permit requirements. Nearly every business, even home-based, must obtain some form of license or permit in order to operate legally and avoid facing fines or even being shutdown.

Why Are They Necessary?
The government has two main purposes for requiring licenses and permits: keeping track of a business’s revenue for taxation purposes and public health and safety. 

For example, in the context of taxation, a state sales tax permit allows the state to oversee the collection, reporting, and payment of sales taxes: A business that sells goods or services collects the sales tax on behalf of the state and is responsible for remitting it to the state. 
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Other licenses and permits are aimed at protecting the public, either physically or economically. For example, occupations that could impact a person’s health, such as doctors, dentists, hair stylists and barbers, generally require professional licenses establishing that these practitioners have a certain level of expertise in their field.

What Do I Need?
Different types of businesses have different types of license and permit requirements. The Knee Law Firm, Ltd. can help you navigate the regulation that goes along with your type of business. Here are a few of the most common types of licenses and permits.

Federal Licenses and Permits
  • Business License. If your business is engaged in federally regulated activities, you must obtain a federal business license or permit from one or more of the alphabet soup of government agencies. Business activities regulated by the federal government include: agriculture, alcoholic beverages, aviation, firearms, ammunition and explosives, fish and wildlife, commercial fisheries, maritime transportation, mining and drilling, nuclear energy, radio and television broadcasting, investment advising, drug manufacturing, and transportation and logistics.
  • Tax Registration. Although it does not issue permits, the IRS requires many businesses to obtain a federal tax identification number called an Employer Identification Number (EIN). One of the main exceptions is sole proprietors with no employees, who can use the sole owner’s Social Security numbers instead.

State Licenses and Permits
  • State Business License. Some states require all businesses conducting a trade or business within the state to obtain a state business license. However, others require only certain types of businesses to obtain licenses, for example, those selling lottery tickets, firearms, liquor, or gasoline.
  • Professional Licenses. Most professional licenses are issued at the state level. They may be required for a wide variety of occupations. As mentioned above, those in health-related professions are usually required to have professional licenses, but they are required for other professions as well: building contractors, accountants, lawyers, real estate agents, funeral directors, and many more.
  • Tax Permits and Registration. Businesses engaging in retail sales often must obtain a sales tax permit. Further, in states with a state income tax, most businesses must register and obtain a state employer identification number. Illinois requires new businesses to register with the Department of Revenue.
  • Business Name Registration. Although it does not involve a permit or license, many states (and localities) require businesses to register their business names. In addition, businesses (most often, sole proprietors) may need to register to use a fictitious name (DBA or “doing business as”) if they want the business to operate under a name other than the owner’s legal name. Illinois requires sole proprietors to register DBAs if the business name is different from the owner’s name.

​Local Licenses and Permits
  • Local Business License. Even if no state or federal business license is required, many businesses must obtain a business license from the locality (city or county) where the business is located in order to legally operate there. 
  • Zoning and Land Use Permit. Businesses, including home-based businesses, must often obtain zoning permits demonstrating that the location of the business is approved for the activities in which the business engages. This is usually a municipal issue, but sometimes the county government is involved, if the property is not within municipal limits.  
  • Home Occupation Permit. To ensure that home-based businesses do not trigger traffic, noise, or environmental conditions that are incompatible with the residential character of a neighborhood, many localities require businesses operated out of homes to obtain home occupation permits or special approval from the zoning or planning division.
  • Fire Department Permit. Some localities require businesses that are open to the public or serve large groups of people, such as childcare centers or retirement communities, to obtain a permit from the fire department. Businesses using flammable materials may also need to obtain this type of permit. Even if the permit is not mandated, those businesses may be subject to periodic inspections by the fire department.
  • Sign Permit. Some localities restrict the size and types of signs that can be used outside a business and require a permit to be obtained before they are installed.
  • Environmental Permits. If your business activities could impact the environment, for example, by burning materials, discharging substances into the sewers or waterways, or emitting gases, you may be required to obtain a special permit from the local departments regulating air and water pollution.
  • Business Name Registration. As mentioned above, some businesses (most often sole proprietors) doing business under a name different from their legal name may need to register their fictitious business name (DBA) with the locality where the business is located.

The Knee Law Firm, Ltd. Can Help
Starting a new business is exciting. We know. We’ve done it ourselves. It can also be complicated. If you have questions about the types of permits and licenses your business must obtain, when they should be renewed, and where they must be displayed or stored, Bill Knee and the Knee Law Firm, Ltd. can help. We’ve got years of experience and can provide advice on establishing your business.

Let’s talk about your vision and how we can help you stay up-to-date on the ever-changing regulations and compliance issues business owners face.


Contact Bill Knee at 847-807-5633
[email protected]
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​​​THE KNEE LAW FIRM  LTD
103 W. PROSPECT AVENUE, MOUNT PROSPECT, IL 60056
PH 847-807-5633        FAX 847-637-0487​
Copyright © 2025
  • Home
  • ABOUT KLF
    • BILL KNEE
    • THE KNEE LAW FIRM LTD
  • KLF Services
    • ESTATE PLANNING
    • LONG-TERM CARE/ELDER CARE PLANNING
    • REAL ESTATE
  • COMMUNITY & EVENTS
    • Annalee Strasburg Gallery Reception 6/27/25
  • Connect with us
  • Make a Payment
  • Resources