Chicago Business Licenses
- Many businesses in Chicago need to register for a city business license or risk severe penalties.
- If you need to get a business license, time it carefully.
- The process can be frustrating, but help is available!
Many of our clients ask if we can help them obtain a Chicago business license, but unless the business is highly regulated by the city or requires special zoning (such as businesses requiring a liquor license, food service, nail salons, or salons), it’s often not worth the legal expenses for them to have a lawyer help with the process. This article contains some tips and tricks about getting a Chicago business license for your business on your own.
Of course, for anyone who wants to get this task off their plate (busy, overwhelmed business owners: we see you), we’re happy to help with the business license process at our hourly rate. Reach out through the contact form below for more info on our services.
Businesses in other cities may need a business license as well. Luckily, other cities in Illinois are usually easier to navigate – city hall is a good place to start. Some info in this article may be helpful even if your business operates somewhere other than Chicago! For example, more conservative municipalities can be stricter than Chicago in their treatment of certain types of businesses (for example, massage establishments or tattoo services). In these situations, it can be helpful to build community support and apply political pressure or get an attorney involved.
Jump to sections:
Does Chicago require a business license?
Most types of businesses in Chicago require a business license to operate, including: food and liquor establishments, retail, entertainment venues, theaters, nail salons, salons, home-based businesses, day care centers, manufacturing facilities, accommodations (including airbnbs and vacation rentals), fitness centers, general contractors, home repair services, caterers, street performers, massage establishments, tattoo and body piercing, etc. The BACP (Department of Business Affairs & Consumer Protection) provides a business license guide with official details about the licenses. It’s a good first place to start to determine whether you need a business license for your business. (Note: there are updated requirements for short term rentals (see the Shared Housing Unit Operator License, or SHUOL) and Pharmaceutical Representatives.)
There are also new business license requirements for Pop-Up Businesses through Chicago’s Pop-Up Initiative.
If in doubt, you should assume you need a Chicago business license if you have a business location in Chicago. If you have multiple business locations, you’ll need multiple business licenses. However, there are exemptions to the requirement for businesses to get a Chicago business license.
Chicago business license exemptions
Some businesses don’t require a Chicago business license. For example, G & G Law, LLC is a law firm regulated by the Illinois Supreme Court. The city of Chicago doesn’t require law firms to have a city business license – I guess they trust the Illinois Supreme Court to do a good job overseeing law firms.
Many businesses licensed by the Illinois Department of Financial and Professional Regulation (IDFPR) similarly are similarly exempt. You can find a non-complete list of business license exemptions from the city here.
Before assuming you’re in the clear, though, you should keep some things in mind:
- Retail or Other Components. Even if your business is regulated by another entity like the Supreme Court or IDFPR, you may need to obtain a business license for a component of your business. For example, optometrists often sell eyeglasses in addition to providing professional services. Chiropractors, acupuncturists, naprapaths, dietitians, or nutrition counselors might sell supplements. Dermatologists might sell lotions or cosmetics. Veterinarians sometimes sell pet food and other pet products. You have to get a Chicago city business license for the retail component of the business, even if the professional business services fall under the exemption.
- Some IDFPR Licensed Businesses ALSO Require a Chicago Business License. Some businesses that require an IDFPR license to operate require a Chicago business license as well. Some of these categories include: businesses related to animal care; General Contractor and Trades licensing (may be through the Department of Buildings); Pawnbroker; Massage Establishments; Nail Salon; Salon/Spa Services; Tattooing, Body Piercing, Tanning; and Tax Preparation.
- Registering your business with the IDFPR. If your business is exempt from the city business license requirements because it’s overseen by the IDFPR, you will likely need to register your PLLC with the IDFPR instead.
- Public Way Use and Sign Permits. Even if you don’t need a Chicago business license, you will need special permits if you have sidewalk signs, business signs, awnings, sidewalk cafes, etc. We have more information about this below.
- Public Way Use Info here.
- Sign Permit info here.
How do I get a Chicago business license?
The simplest way is to apply online, which you can do on the BACP website.
The Small Business Center (SBC) within Chicago’s Business Affairs and Consumer Protection (BACP) department regulates business licenses in the city.
For some businesses, the simple online application won’t work. Examples include when:
- The online application is not available for you;
- You want to start the business license process early, before you have a business entity (like an LLC) in place or the address you’ll be applying with, to get your business operational as soon as possible;
- You like to get as much information and learn as much as possible; or
- You’re not clear what licenses and permits you need.
If any of the above apply to you, try following these steps (we recommend doing all of them, in order):
- Make an appointment with a BACP Business Consultant. The BACP has gone back and forth over the years on whether you can make an appointment with a Business Consultant in advance, as opposed to only taking walk-in consultations during business hours. As of the writing of this article, this page says:
“To request an appointment to meet with a Business Consultant, please call our Business Contact Center at 312.74.GOBIZ (744.6249).”
You can still get a walk-in appointment, but we recommend trying to make one in advance to decrease the chances of having to spend half your day at the BACP office.
- Get the Business Consultant’s Full Name, Email Address, and Direct Phone Number. If you are spending the time to go downtown to meet with a Business Consultant in person, we recommend making the extra effort to avoid having to do so again. Get the consultant’s name and contact info so you have a way to ask follow-up questions. The contact info also comes in useful when working on step #4.
- Listen Carefully and Take Notes on the Information Provided by the Business Consultant. This will help you to both remember the correct course of action for your business and send a thorough follow-up that you can use to defend your actions, if needed (see step #4, below).
- Send a Follow-Up Email to the Business Consultant Confirming the Information. You might well get conflicting information from different people within the BACP. The ordinances related to business licenses are sometimes confusing and open to interpretation. If a problem does arise with your business license at some point, having written proof that you acted on information provided to you by the BACP could come in quite handy as a defense.
For those who want to get this task off their plate (busy, overwhelmed business owners: we see you), we’re happy to help with the business license process at our hourly rate.
If you still can’t get a business license on your own after performing these steps, don’t worry, help is available! Read on to the next section.
How can I get help with my Chicago business license?
There are many resources available to get help if you are struggling to get a Chicago business license. Of course, bringing in legal help or consultants can hasten the process, but they come with financial costs, and businesses starting out often have limited financial resources. If you want some ways to move the process along without investing valuable start-up funds (or in addition to paying lawyers or consultants), here are some options.
- Aldermen. Chicago has improved the business license process over the years to make it more accessible, and it’s largely shed the old Chicago reputation of having to play some sort of political game to succeed. However, sometimes getting the neighborhood leadership on your business’s side provides a great benefit. It can be helpful to think through how your business will benefit the local neighborhood, then meet with the alderman to build that neighborhood support behind you. They might be able to point you in the direction of other resources, and perhaps even find ways to move the process forward more quickly.
- Chambers of Commerce. Your local Chamber of Commerce is another source of free help. Their mission is to support local businesses, they can offer their experience helping neighborhood businesses obtain licenses, and they often have connections to the city that can prove useful when navigating the bureaucracy.
- Chicago Business Centers. Even better, the BACP opened eight Chicago Business Centers across the city – neighborhood-based satellites that provide on-the-ground, personal help to business owners. They provide help with licensing, permitting, funding, and individualized guidance to helpful resources. We interact regularly with two, in Uptown and in Albany Park, and have always found them responsive, responsible, and proactive in their assistance. When a client needs help getting a business license, we always send them to the CBC.
- G & G Law. That’s us! Don’t hesitate to reach out if you’d like to engage us to help with your business license.
What are the penalties for not getting a Chicago business license?
The penalties for operating without the required Chicago business licenses or for failing to pay any renewal fees can be quite severe. Per Section 4-4-010 of the city’s municipal code, violators can be fined $250-$500 per day for each offense. And remember, per the ordinance, “Each location at which a business operates must be separately licensed”, meaning that each unlicensed location can incur its own offenses. In addition, per Section 4-4-015, “The Commissioner is authorized to order a business closed, in whole or in part.” A business that continues to operate after receiving such an order is subject to financial penalties of $500-$1,000 per day for each offense, PLUS possible criminal penalties – including up to six months of jail time.
In our experience, the city rarely imposes the most severe of these penalties, especially for innocent mistakes. The city of Chicago and the BACP do value businesses and the role they play in the city. it’s a win/win for the city and the businesses for businesses to be guided into a direction where they can continue to operate, while also keeping the public safe.
A Chicago business license violation notice is called an “Administrative Notice of Ordinance Violation”. If you get one of these, read it carefully and respond quickly! You need to get your business license in place or correct whatever issue is listed under the “Notice to Correct” immediately, whether it’s “operating without the required limited business license”, “failure to display required license”, or something else. We recommend making a written record of all efforts you take to correct the issue to show the city and administrative judge.
The Administrative Notice will also have an “Administrative Hearing Appearance” notice. This is a mandatory administrative court appearance, and we recommend that you have a lawyer appear on your business’s behalf. In the past, we’ve been able to enter a plea deal with fines well below the potential penalties listed at these types of hearings (although past experience in no way guarantees future results). We need as much advance notice as we can get to fit any such appearances in our schedule. If you’d like to see if we’re available, please reach out as soon as you possibly can. We bill at our hourly rate if we agree to take on these types of projects.
The “Emerging Business” problem
I want to provide fair warning on this section: It concludes with more questions than answers. There exists a tension when advising certain businesses about business license questions, especially innovative businesses that the city yet to regulate. Some, but not all, of the businesses in this category are referred to as “emerging businesses”; sometimes we call this space “the wild west.”
Specifically, we struggle with how to advise businesses with amazing business plans, but which don’t fit into any business license category. One of our firm’s values is “Highest Ethics”, and this question is where the ethical rubber meets the legal road.
Case in point, take Uber (who we never had as a client – all of this information comes from publicly available articles and personal experience). By now, it seems most people in the city use rideshare services much more than they use traditionally-licensed taxicabs. And rideshare services improved transportation in the city in many ways. I have a few scary cab stories from my early twenties, including once having a cab driver follow me into my apartment as I got cash for him because he refused to take my credit card, even though he was legally required to accept them. Not to say that rideshare services have zero safety concerns, but I personally feel safer at least knowing that my phone can keep a record of where I am if I use one. I also appreciate being able to summon a ride anywhere in the city, rather than only easily hailing a cab on a busy street in certain neighborhoods.
How did the innovation of rideshare services happen? I don’t think it’s too controversial to say that we wouldn’t have rideshare services today if Uber had followed all the rules by the book when they rolled into Chicago in 2011, including city business licensing requirements. It took Mayor Emmanuel years to propose a brand new business license that covered Uber’s services, with the traditional taxi industry vociferously protesting all the while.
Should Uber’s lawyers have encouraged Uber to wait until they could obtain proper city licensing that applied specifically to their type of business before launching?
I honestly don’t know the answer to that question. On the one hand, I appreciate the innovation. Note that Uber launched in Chicago in 2011, and received its city business license a full four years later in 2015. On the other hand, Uber’s fast-paced corporate culture was apparently rife with “bad behavior”:
“It’s clear from former Attorney General Eric Holder’s recommendations on how to fix Uber’s dysfunctional management that the male-dominated company grew huge without even the most basic procedures to prevent sexual harassment, bullying and other bad behavior.”
For another example of a previously emerging business model, look at short-term vacation rental owners (owners of Airbnbs, VRBOs, etc.). Today, Chicago has specific business license requirements for short term rental businesses, and you absolutely should make sure you have a city business license before operating one in the city. However, back in the early 2010s, some owners and operators of short-term rentals were told to follow prohibitively strict hotel or bed and breakfast regulations when they tried to follow the rules and properly obtain business licenses. The regulations simply hadn’t caught up to the innovative new business model. And short-term rental business owners were sometimes reluctant to even try to get a business license, worried that it would put them on the city’s radar for shutting them down.
Small business innovation continues to happen! As just one example, the last few years witnessed a rise in mobile entrepreneurs expanding beyond food trucks. We see businesses who sell products, like shoes and clothes, or offer services, from dog grooming to IV hydration, all from the back of a truck.
These types of businesses can now apply for an “emerging business permit” via an update to the municipal code, but this permit only lasts for two years. After this time, the permit holder can only continue operating if they’ve successfully convinced the city council to create a new business license category or expand an existing category. There are questions regarding whether that’s enough time for a fledgling business.
When is it our job to say “every business needs a business license, end of story” versus “here are the potential penalties and consequences for proceeding; do what you want”? Should business owners in these grey areas try working with the city and its bureaucracy (we also recognize the city’s efforts to help innovative businesses)? Or should they avoid rocking the boat and attracting attention if the potential penalties are within their acceptable level of risk?
I also wonder how issues of bias play into these questions. Do underrepresented business owners – non-white, women, queer, poor – get told more often that “You have to follow the rules”, while upper-class white men get nostalgic stories about starting businesses in their garages, get labeled “disruptors”, and get to “move fast and break things”?
No easy answers, but often the best answer to our “Highest Ethics” questions is to hold these important conversations. Sometimes the best we can do is to speak to the tensions involved.
What other questions should I be asking?
One of the most frustrating parts about entrepreneurship, especially when just starting a business, is that you often “don’t know what you don’t know.”
Business owners with questions about business licenses often have related questions about:
- Zoning. The City of Chicago is divided into separate zoning districts depending on what type of business and neighborhood uses are allowed in that area. Most business license applications must pass a zoning review. This checks whether the type of business is allowed in the area it will be operating. You can read more about zoning here.
- Public Way Use and Sign Permits. Businesses with sidewalk signs, business signs, awnings, sidewalk cafes, and the like need special permits You should always work with a general contractor or electrical contractor licensed by the City of Chicago when installing these, and they should guide you through the process of obtaining the correct permits. We also recommend having a lawyer review your contracts with such contractors. This way, you can ensure they have the correct licenses and that they take responsibility to make sure the correct permits are in place. We have more information about this below.
- Public Way Use Info here.
- Sign Permit info here.
- Leases for Commercial Property. Worst case scenario: you can’t get the business license or zoning you need for your business and you already signed a multi-year lease that you can’t get out of. This can be a costly mistake – possibly hundreds of thousands of dollars, depending on the monthly rent. Prevent this by making sure your lease is conditional on you getting the licenses and zoning required to operate your business. We strongly recommend having a lawyer review your lease before you sign it. We can work with you to clarify the lease, zoning, and business licensing requirements, giving you confidence that you can run your business in the space you rent. Email us at firstname.lastname@example.org for more information about our services.
- Illinois Department of Revenue Registration. We recommend discussing questions about registering with the IDOR with your accountant or CPA.
When should I get a Chicago business license?
You should apply for a Chicago business license after forming the entity for your business, whether you form an LLC, PLLC, or Corporation.
However, you may also need to know the specific address the business will operate from before applying for a business license, which means signing a lease before you start the process. This can get tricky! Businesses strictly regulated by the zoning requirements (such as salons, manufacturing, animal services, auto services, recreation, health clubs, and liquor stores) should make especially certain they navigate license and lease issues simultaneously.
- Applying After LLC Formation. Forming an entity for your business is the highest priority legal action item for business owners. It’s an easy and cost-effective way to protect your business by providing limited liability. Limited liability means that the business’s assets and the owners’ personal assets stay separate, shielding personal assets from the business’s risks. We can help:
- Applying In Tandem With Signing a Lease. If your business license application requires a zoning review, you have to provide your business’s operating address before applying. You should absolutely ensure the address has the correct zoning designation before signing a lease. This is a tricky balance when it comes to leasing or purchasing commercial real estate – you have to sign the lease or close the deal before you know if the city will allow you to operate there. In this situation, it’s extremely important that you have an attorney review your lease before you sign it. We can help:
- Review your lease to ensure you can get out of it if you can’t get the zoning or business license required to operate your business.
- ASAP for Highly Enforced Businesses (Storefronts, Special Zoning). Entrepreneurs are extremely busy, and when you’re starting a business, we know there are a lot of tasks on your list. Therefore, ongoing prioritization of your task list will help you tackle the most important to-dos first. Obtaining a business license should land near the top of that list for anyone with a storefront, a business that requires special use zoning (e.g. salons, manufacturing, animal services, auto services, recreation, health clubs, liquor stores), or another type of business subject to strict regulation (like rental properties) or likely to be on the city’s radar. We would place it right after entity formation and in tandem with securing a location.
The stakes are likely lower for other types of businesses. Some business owners, like consultants or home-based businesses, prioritize other tasks more highly.
This was one of our longest articles for a reason – business licenses in the city can get complicated. Big cities have to balance protecting their residents from predatory businesses with supporting (or at least not hindering) all the hard-working, beneficial business owners serving as the backbone of the city’s economy and its culture. The Old Chicago Way has historically, or at least reputationally, been, ahem, not so good at that. However, things are definitely improving, and now Chicago business owners now have more help and resources than ever.
To that point, please take this article with a grain of salt. It may not be 100% accurate, and you should be aware that the business license process and environment is constantly changing. However, despite the shifting licensing landscape, we decided to provide more information rather than less, sprinkled with a bit of opinion. We aim to help move city licensing away from its prioritization of insider information and who you know. Offering our insight into the process and increasing accessibility accords with our value of “Highest Ethics”.
Please reach out and let us know if anything in this article was helpful to you! We also want to hear about your business license experiences. Another one of our values is “Keep Growing”. To that end, we’d be thrilled to update our article based on feedback from business owners’ first-hand experience with the process.
Finally, maybe you’re reading this article because you’re in the process of starting a business? We have more info for you! Some links that you might find helpful: