Occupational License Definition

Many companies need a license from a government agency at the federal, state or local level to operate. Certain industries have more licensing requirements than others, depending on typical business operations within that industry.


Most states require companies within their borders to have a license to conduct business. Smaller municipalities, such as counties and cities, may require additional licensure for business operations. Businesses with multiple locations in several states often need an occupational license for each state.


Occupational licenses may require the payment of a flat fee or a sliding scale based on a company’s gross revenues. For example, a company with gross revenues of $1,000 may have to pay 2 percent of sales, while another company with gross sales over $50,000 may have to pay 2 percent of sales.



Companies may need multiple licenses -- such as those for sales tax, liquor, firearms or gasoline -- to operate. Each of these licenses carries different requirements for business operation. Most licenses have an annual renewal, although this may differ from state to state.