Four Different Things People Call a Licence

One word, four things

Ask five people whether you need a licence and you will get five answers. They are not disagreeing. They are talking about four different objects.

Here they are side by side.

The thing	Who hands it out	What it is for	What it does not do
A general licence	Your city, sometimes your county	Permission to run a business in that place	Nothing about your trade or your tax
A trade licence	A state board for that job	Permission to do that particular work	Nothing about tax or your city
A sales tax permit	Your state's tax office	Lets you collect the state's sales tax	It is not permission to trade
A name filing	Usually your county clerk	Puts your trading name on record	It does not protect the name

Once you can tell them apart, the question stops being "do I need a licence" and becomes four smaller questions with four different offices to ring.

One: the general licence

This is what most people mean by the words business licence. Permission from a place to do business in that place.

The thing to know is that there is no national one. The federal small business agency, the Small Business Administration (SBA), says what you need depends on what you do and where you are. The SBA's sentence is printed below.

Some cities have one for everybody. Some have one only for certain trades. Plenty of places have nothing of the kind. That is why nobody can tell you the fee.

Two: the trade licence

This one is not about business at all. It is about the work.

Cutting hair. Nails. Tattoos. Electrical work. Handling food. Driving people for money. States put boards in charge of these, and the board sets the rules.

If your work is on that kind of list, the board is the office that matters. A city licence does not cover you and neither does anything else on this page.

If your work is not on the list, and most work is not, this whole section is somebody else's problem.

Three: the sales tax permit

A sales tax permit is a tax account with your state. It lets you collect sales tax from customers and it makes you responsible for sending that tax in.

It is not permission to be in business. People mix these two up constantly.

Two things make it less scary than it sounds. Not everything is taxed, and it varies by state. And if you sell through a big marketplace, that marketplace is often collecting already. There is a whole page here on sales tax and it starts with the good news.

Four: the name filing

If you trade under a name that is not your own name, a lot of places want that on record. The old phrase for it is doing business as (DBA), and the official name in a lot of states is an assumed name certificate.

Here is what it does. It puts on public record that a person called you is trading as a name called something else. That is all.

Here is what it does not do. It does not protect the name. Texas says so in its own words below, and adds that two different people can have the same name on file at once.

It also does not make you a company. It is not a wall between the business and your own things. There is a separate page here on what a company does, and it is worth reading before anybody sells you one.

And for a one person business, this is a county job. Texas puts it with the county clerk in each county where you have a business office. That is why the honest answer is always the same: look up your own county clerk. Never file something because an article told you to.

The order to do this in

Start with your trade. Is what you do on a state board's list? If yes, ring the board first, because it outranks everything else here.

Then your city and county. One search each, on .gov pages, then a phone call if it is not clear.

Then tax. Only if you sell things that are taxed where you are, and only after you have read what your marketplace already collects.

Name filing last, if at all. It is the one people do first, and it is the one that does the least.

Before you pay for any of them

Every fee on this page goes to a government office. If a website is charging you to file something, you are paying somebody to fill in a form you could fill in.

That is sometimes fine. It is worth knowing that is what it is.

Show an adult before you pay anything, and check the date at the top of this page. These rules move and they are different one county over.