Module 02 of 07
Licenses, permits and inspections
Registering your business makes it legally exist. Licenses and permits make it legal to operate. They're different things — and what you need depends on your industry, your location, and what your business actually does. Physical businesses typically need more of these than any other type, and most are not one-time events: they renew annually and require ongoing compliance.
The four types of permits and licenses
Select a type to see what it covers and who needs it.
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Many cities and counties require a general business license — sometimes called a business tax certificate — for any business operating in their jurisdiction. The fee is usually $25–$100/year and renewal is annual. This is separate from your state registration and separate from any industry-specific license.
Who needs it: Most businesses with a physical location in an incorporated city or county. Check with your city hall or county clerk — it's often the first permit you'll need.
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Regulated industries require a license from a state licensing board before you can legally operate. These often require passing an exam, documenting experience, maintaining insurance, and renewing annually. Operating without a required professional license can result in fines, forced closure, voided contracts, and personal liability.
Examples: contractors, electricians, plumbers, cosmetologists, estheticians, massage therapists, food handlers, childcare providers. Also required for some retail categories — firearms, alcohol, tobacco, lottery.
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Zoning determines what types of businesses can operate in a given location. Before you sign a lease, verify your business use is permitted in that zone. A Certificate of Occupancy (CO) confirms the specific space meets safety codes for your use — required for almost all retail, food, and service businesses in commercial spaces.
A building zoned for retail may not allow a commercial kitchen. A space zoned for light industrial may not allow customer-facing retail. Always verify zoning before committing to a location.
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Required for any business that handles food, serves alcohol, or operates in a regulated health environment. Issued by your local health department and requires passing an initial inspection. After opening, health inspections are typically unannounced and happen 1–4 times per year depending on your risk classification.
Who needs it: restaurants, cafés, food trucks, farmers market food vendors, delis, catering businesses, any retail with a food bar or samples. Some personal service businesses (salons, tattoo studios) also require health department licensing.
In this Module
Four types of permits
Certificate of Occupancy
Inspections
Annual renewals
Real-world example
Related Modules
Sales tax
ADA compliance
Food safety
Certificate of Occupancy: the permit most people forget
If you're opening a retail storefront, restaurant, salon, or any business that occupies a commercial space, you almost certainly need a Certificate of Occupancy (CO) — or a Change of Occupancy permit if the previous tenant used the space differently than you will.
A CO confirms that the building meets safety codes for your specific use. A building that was a clothing store may not automatically be approved for a bakery — the electrical, ventilation, and plumbing requirements are different. Your landlord may have a CO for the building, but you need one for your specific use of the space.
Don't sign the lease first
A CO application happens after you occupy the space — but you should verify the space is approvable for your business use before signing the lease. Ask the city's building department whether a CO for your specific use (food service, retail, personal services) is feasible in that space. Some buildings have restrictions that make certain uses impossible or very expensive.
Real-world example
Marcus signed a lease for a coffee shop space that had previously been a dry cleaner. After signing, he learned the building's ventilation system wasn't rated for food service and the plumbing couldn't support a commercial espresso machine. The CO required $28,000 in building modifications — which his lease made him responsible for. A pre-lease conversation with the building department would have revealed this before he was committed.
Inspections: what to expect and how to pass
Physical businesses are subject to inspections from multiple agencies — often unannounced. The main ones:
Fire inspection. Confirms exits are unobstructed, fire extinguishers are current, sprinkler systems work, and occupancy limits are not exceeded. Usually required before opening and then annually. Violations can result in immediate closure.
Health inspection. Required for any business that handles food — restaurants, cafés, farmers market food vendors, caterers, even retail stores with a coffee bar. Inspectors check food storage temperatures, hand-washing facilities, pest control, and equipment cleanliness. Unannounced after opening.
Building inspection. Required when you make physical changes to a space — adding walls, electrical work, plumbing, HVAC. You pull permits before the work and inspections happen as work progresses and again at completion.
Staying inspection-ready
The best approach is running your business as if an inspector could walk in at any moment — because they can. Keep your fire extinguisher tags current (annual service required). Store food at correct temperatures every day, not just when you expect an inspection. Keep your exit paths clear of boxes and equipment. Post your required permits where they're visible.
Annual renewals: the part people forget
Most business licenses and permits are not permanent — they renew annually, and it's your responsibility to track the deadlines. A lapsed license can mean fines, forced closure, or complications when a customer, landlord, or insurer asks for proof of current licensure.
Build a compliance calendar
When you obtain each permit or license, write down the expiration date and set a reminder 60 days before renewal. Common ones to track: general business license (usually annual), health permit (annual), fire inspection certificate (annual), professional license (annual or biennial), sales tax registration (may require quarterly filings).