Opening a nail salon, pho restaurant, or convenience store in the U.S. — the first step is not buying supplies or renting a space. The first step is legal paperwork. Many people in our community skip this step because they think it's too complicated, or they've heard from acquaintances that "it's not necessary." The result is fines, business closures, or worse — lawsuits.
This article will explain what types of business licenses are required in the U.S., why they're necessary, and how to avoid the most common mistakes.
What is a Business License — and Why Isn't There Just One?
Many people think a "business license" is a single document, like a driver's license — apply once and you're done. That's actually not how it works.
In the U.S., operating a legal business usually requires multiple types of licenses and registrations, ranging from the federal level, to the state level, down to the city or county level. Each level manages a different aspect.
Think of it this way: opening a restaurant is like driving long distance. A driver's license is a basic requirement, but you also need vehicle registration, insurance, and must comply with traffic laws in each state. Missing any one of these could mean having your vehicle stopped on the road.
The Most Common Types of Licenses and Registrations
1. Fictitious Business Name Registration (DBA — Doing Business As)
If you operate a business under a name different from your legal name or your company's registered name, you need to file a DBA (also called a fictitious business name). For example: If Mr. Nguyễn Văn Hùng opens a restaurant named "Phở Bà Ngoại," he needs to register a DBA for that name.
DBA registration is typically filed at the county level, with fees usually ranging from $10 to $100 depending on the area.
2. Local Business License
Most cities and counties require businesses to have a local business license — this is permission from local government to operate in that jurisdiction. It needs to be renewed annually and is usually based on revenue or number of employees.
Example: The City of Los Angeles requires all businesses operating in the city to have a Business Tax Registration Certificate, even if you're just freelancing from home.
3. Professional and Occupational Licenses
Some industries require separate licenses issued by the state. These are common in the Vietnamese community:
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Cosmetology and nail services: Require a Cosmetology License or Nail Technician License issued by the State Board of Cosmetology.
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Food and restaurants: Require a Food Handler Permit, Food Manager Certification, and sometimes a separate Alcohol License.
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Real estate: Require a Real Estate License issued by the state after passing an exam.
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Financial services and insurance: Require multiple federal and state licenses, depending on the type of service.
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Construction and repair: Require a Contractor's License — especially important in California.
4. Zoning and Building Permits
This is the point most people overlook.
Zoning (land use zoning) determines what types of businesses are permitted to operate in a given area. For example: you cannot open an auto repair shop in a purely residential neighborhood, even if you have all other required licenses.
Building Permits are required when you renovate or modify your business space. Many Vietnamese business owners have faced heavy fines for renovating restrooms, adding signage, or building partitions without prior permission.
5. Sales Permits and Sales Tax Registration
If you sell tangible goods (food, clothing, cosmetics, etc.), most states require you to register for a Seller's Permit to collect and submit sales tax to the state.
In California, the governing agency is the California Department of Tax and Fee Administration (CDTFA). This registration is free, but failing to do it has serious consequences.
6. Federal Employer Identification Number (EIN)
An EIN is a tax identification number issued by the IRS (Internal Revenue Service) — it's like a social security number for your business. You need one if you have employees, want to open a business bank account, or plan to form an LLC or Corporation. Registration is free at IRS.gov.
Overview: Who Needs What?
| Type of Business | DBA | Local License | Seller's Permit | EIN | Industry License |
|---|---|---|---|---|---|
| Nail salon | May be needed | ✅ Required | ✅ Required | ✅ Recommended | ✅ Nail License |
| Restaurant, food service | May be needed | ✅ Required | ✅ Required | ✅ Required | ✅ Food Permit |
| Online retail | Rarely needed | Varies by state | ✅ Required | ✅ Recommended | Varies by industry |
| Freelancer, consultant | May be needed | Varies by city | Usually not | ✅ Recommended | Varies by industry |
| Retail store | May be needed | ✅ Required | ✅ Required | ✅ Required | Varies by industry |
The Most Common Mistakes — and Their Cost
Mistake 1: Thinking that forming an LLC is enough.
Forming an LLC (Limited Liability Company) with the state is just the first step. An LLC doesn't automatically give you permission to operate — you still need local business licenses, industry-specific licenses, and related tax registrations.
Mistake 2: Using your home address for business without checking zoning regulations.
Many people in our community start by working from home — sewing clothes, cooking food to sell online, providing nail services at home. Some residential areas prohibit or restrict these activities. Check your city's zoning regulations before starting.
Mistake 3: Not renewing licenses by their expiration date.
Most licenses must be renewed annually. Failing to renew can result in fines, suspension of operations, or loss of license.
Mistake 4: Not having Workers' Compensation Insurance for employees.
If you have employees, most states require Workers' Compensation Insurance. Without this insurance, if an employee is injured, you could face a lawsuit and significant financial liability.
Mistake 5: Following advice from acquaintances without verifying it.
Regulations change year to year and vary by location. What was correct in San Jose in 2018 might be wrong in Houston in 2026. Always verify with local authorities.
Where to Start
The process of obtaining licenses may sound complicated, but if you take it step by step, it's completely manageable.
Step 1: Identify your business type and location.
Step 2: Look up requirements on your city and county website — search for "business license" or "starting a business.
Step 3: Check your state's requirements — each state has its own information portal. For example, California has business.ca.gov.
Step 4: Register for an EIN for free at IRS.gov if you don't have one.
Step 5: If you're unsure, consult with a small business attorney or accountant familiar with the Vietnamese community. Many nonprofits like SCORE (the federal Small Business Administration's mentoring organization) also have Vietnamese-speaking advisors in some areas.
Helpful Resources
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SBA.gov — The federal Small Business Administration: provides step-by-step guides by state and industry.
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SCORE.org — Free business mentoring, available for in-person or online appointments.
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Business.ca.gov — For California businesses, with a complete list of licenses by industry.
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IRS.gov/businesses — Register for an EIN and federal tax information.
One Thing to Remember
Legal paperwork is not a barrier — it's a foundation. A business with complete paperwork will find it easier to secure bank loans, sign contracts with major partners, and protect personal assets when disputes arise.
The Vietnamese community in the U.S. has built very successful businesses — from Little Saigon in Orange County to the Bellaire area in Houston. The foundation of that success is not just hard work, but also doing things the right way from the start.