Do I Need a Business License?

Business License

Operating a business without the required license or permit can get you into trouble with the local government, but determining whether you need a license can get tricky. Different states handle laws differently, and some counties or cities may have specific laws relating to licensing that differ from the state's. Making matters worse, different industries have different licensing laws. For example, food-related businesses nearly always require licenses, but non-service industries often do not. Before starting a resale business, it's a good idea to check with your state and local laws to make sure you're running things legally.

There are a few situations where business licenses are always necessary:

  • Service industries where you perform a service on a customer, such as a tattoo parlor
  • Food industries where you prepare or sell homemade food items
  • Any time you request bank financing for your job
  • Whenever you open a bank account under the company name

In Texas, there is no “general” business license. There are about 250 licenses for different types of occupations, including auctioneer and salesperson. The salesperson license primarily refers to major sales, like cars and real estate, rather than home-based resale businesses, but it's something you should look into before opening a store. Most counties do not have any additional licensing requirements, but you should check with the state of Texas at Texas.Gov to make sure.

In general, a small-scale resale business will probably not require a license, especially if you're operating out of your home. If you're just selling a few items over eBay or Craigslist, you can get by without obtaining a license. Once your business expands or gets its own premises, though, it's generally a good idea to obtain a license to make your business more official. This will allow you to open a bank account and do business under your company's name, and it makes it easier to handle your taxes at the end of the year.

Also bear in mind that even if you don't need a business license, you are legally responsible for a few other things when running a home-based small business:

  • You'll need a sales tax permit to sell anything in the state of Texas
  • You need to make sure that your home is zoned for business use
  • You might need to modify your insurance policy if you'll have buyers in your home

These extra expenses need to be taken into account when starting your business. It's also a good idea to consult with an attorney and a tax professional once your business starts to get serious; they can advise you about the best route to take to protect yourself and keep the most of your money.


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