No matter the type of business, all small business owners need a license to operate their business. Sometimes this license is simply in their own name and other times it is a registered company. A license suspension occurs when that individual or company is not granted a license for their business. This may be for a specified period of time or until further action is taken.

Why Licenses are Suspended

There are a number of reasons why licenses may be suspended. As licenses may be granted at the federal, state, and municipal levels, there are different rules and regulations regarding revocation of licenses. Often, business license suspensions occur because the business owner has not paid applicable fees, including taxes. Businesses that have broken certain laws may also be penalized with a license suspension.


You will receive notification from the appropriate government body that your license has been suspended by email or mail. The message you receive should outline what you can do to reinstate your license. It may give a date which you will be allowed to apply for a new license. You should take the message seriously and follow the instructions included in it, otherwise you risk having your business shut down for good.

Types of Licenses

Group Project The following are some of the various types of licenses. It is important to know the rules and regulations surrounding your license if you want to avoid having your license suspended.

  • Federal Licenses: Businesses that are involved in transactions that are regulated by a federal agency, for instance the sale of alcohol and firearms, or mining- and agriculture-related businesses, must obtain permits at the federal level.
  • State Licenses: Virtually every business that is not covered by federal licensing laws needs a permit or license to operate legally. These vary according to the type of business, state, and the government rules that apply to that particular industry. Visit the United States Small Business Administration (SBA) to find out what kind of permit or license you need according to the state your business will be operating in. This is also the best place to find information on license suspensions and renewals.


If your business license has been suspended, you no longer have the right, power, and privilege to conduct business in your state. If your federal license was suspended, it means that you cannot conduct business across the United States. If you are found engaging in a transaction with a customer you will face more severe consequences. Once your license has been reinstated, you can go back to doing business as you normally would.

Quick Summary

Businessman reading newspaper, white backgroundA license suspension typically occurs when a business fails to pay taxes or fees associated with the operating permit or license. It may also serve as a penalty when a company breaks the law. Notification is usually received in the form of a letter or email. The message should include instructions on how to reinstate your permit. Since there are a variety of types of permits at both the state and federal level, you need to be aware of the specific regulations for the type of permit that you have to operate your business.