Business License
Definition
A Business License is a permit issued by a government agency that legally allows you to conduct business within a specific geographic jurisdiction. Depending on your industry and location, you may need a local city license, a county license, a state occupational license, or even a federal permit.
Why it matters
A massive misconception among new entrepreneurs is that forming an LLC and getting a business license are the same thing. They are completely separate. Forming an LLC creates your legal entity at the state level. A business license gives that entity permission to operate in a specific city or county. Simply having an LLC does not mean you have the legal right to open your doors to customers without the proper local permits.
Example
Derek forms an LLC with the state of Washington to open a coffee shop in Seattle. The state approves his Articles of Organization. However, before he can legally serve his first cup of coffee, he must apply to the City of Seattle for a local business license, and apply to the King County Health Department for a food service permit.