What do you need to know about business licenses and permits as a contractor?

bluepring - Best Contractor Estimating & Invoicing Software - Hearth

Before you can make your business idea a reality, you need the right licensing and permits to do business in your state, county, and/or city. It’s one of the more tedious parts of owning a business, but it’s important for two reasons. 

  1. It gives customers the reassurance that you know what you’re doing and you’ll do it safely. 
  2. Financial institutions often require licenses and permits before offering business financing. 

Check with your local and state government websites for more information on the required permits and licenses you need. If that proves to be not useful, check with your local chamber of commerce or a business consultant for more guidance. Here are some of the licenses and permits you may need for your home improvement business. 


  • Licenses you may need to secure financing and insurance for your business
  • Which permits you may need to get your job off the ground
  • The federal agencies that govern health and safety guidelines for your industry
person signing license paperwork

Defining Licenses


This is perhaps the most important license for your home improvement business. State regulations may require you to secure a license for your particular trade before you can officially begin doing business. Other permit and licensing processes might require you to have this license before all others. To find out which trade licenses you’ll need check your state licensing department website. 


Your city or county may require you to apply for a business license before you can operate in the area. These are usually easy to get your hands on. A great resource to check whether you need to get a special business license for your business is Angie’s List*


Tax Permit

As a home improvement business owner, what is taxable and non-taxable can be confusing. It all comes down to your state’s laws. To make sure you can apply taxes to any of your goods or services, you’ll need a tax permit or seller’s permit from your state government. 


As you know, many local governments require permits to start any kind of renovation, remodeling, or expansion projects. These permits are required for commercial and residential properties. Permit requirements for specific types of projects can seem confusing and overwhelming. It’s especially difficult if your area of operation spans several towns, cities, or counties. Before starting a project, it’s best to check with the local government so your project isn’t halted or either you or your customer face financial consequences. It is often the responsibility of the contractor to secure the necessary permits for a project. 


Because your company may handle sensitive and harmful materials, your state or local government can require you to apply for an environmental license. This license will ensure that you understand how to dispose of hazardous materials and limits to the pollution created by your business. 

Defining Permits


If you’re planning on securing a location for your business, you’ll need to be aware of your local government’s zoning regulations. These regulations will determine where you can plant your base of operations. If you are considering running your business from your home, you may need a home occupation license. 

Fire department

Some local governments may require you to secure a permit from the fire department in order to open your doors to the public. You may also need their permission to store any flammable materials at your facility. 


Before you can install your business’ signage on your property, you’ll need a signage permit. This permit ensures that your sign doesn’t break any local regulations when it comes to size, location, or brightness. 


Special state and federal licenses

This may not apply to your home improvement business, but it is important to note that there may be some special state and federal licensing requirements you need to be aware of. To be absolutely sure, visit the SBA site to learn more about what federal licenses you may need. Don’t forget to check your state government’s site for more information as well. 

The second most important thing about securing your licenses and permits is remembering to renew them. Set reminders for yourself for renewal deadlines. You wouldn’t want to have to stop work because renewing an expiring license slipped your mind. 

Federal regulations

Occupational Safety and Health Administration (OSHA)

Finally, if you have employees or plan on hiring you’ll need to review the OSHA regulations that apply to your trade. OSHA has a page dedicated to explaining regulations for construction companies. It’s important to follow these regulations closely. As an employer, you open your business up to future legal issues if as an employer you are found to be negligent in your duty to uphold these regulations. 

Environmental Protection Agency (EPA)

Another federal agency’s regulations that can impact your work is the EPA. The EPA’s regulations can determine the type of work you’re allowed to do in a particular area and how to properly dispose of debris and materials. The EPA’s website has guidance on laws, regulations, and specific types of projects. Before starting a job, the EPA recommends that you: 

  • Recognize the federal environmental requirements and factor in the associated expenses for the project;
  • Designate the responsible party to fulfill these requirements;
  • Complete the requirements by filing the necessary paperwork, performing the required activities, and obtaining the essential permits; and
  • Identify additional sources of information to help implement these requirements throughout your project. 

This section may have your head swimming with information. Spend some time with the information and create an action plan to become familiar with licensing, permit requirements, and federal regulations for your industry. 

*Hearth and Angie’s List is not affiliated in any capacity. Hearth is not being paid or sponsored by Angie’s List for this blog post. 

Get Started Today