McKinney, Texas does not issue a general "business license" — but that does not mean you can open your doors without paperwork. Most businesses operating in McKinney need a Certificate of Occupancy, a Home Occupation Permit, a Texas sales tax permit, or some combination. Operating without the required permits can result in fines, stop-work orders, and forced closure.

Step 1: Determine Which Permits Apply to Your Business

Which permits you need depends on three factors:

1. Location — Are you operating from a commercial space, a home, or entirely online?
2. Business type — Food, health, childcare, and certain service businesses face additional permit requirements beyond standard city approvals.
3. Signage and alarms — Any exterior sign or alarm system requires its own separate permit from McKinney's Building Inspections division.

Online-only businesses (no physical storefront, no employees working at a commercial address) typically need only a Texas sales tax permit if they sell taxable goods or services. There is no McKinney-specific permit for a purely remote business.

Common mistake: Many new business owners assume that because McKinney does not issue a "business license," they owe no city paperwork at all. Wrong. The Certificate of Occupancy and Home Occupation Permit are mandatory before you legally begin operations at a physical location.

Step 2: Apply for a Certificate of Occupancy (Commercial Locations)

If your business occupies a commercial space — retail storefront, office, warehouse, salon, or restaurant — you need a Certificate of Occupancy (CO) from the City of McKinney Development Services department before you open.

How to apply:

1. Go to the McKinney Development Services portal: mckinneytexas.org/180/Development-Services
2. Submit a CO application through the city's online permitting portal or in person at McKinney City Hall, 222 N. Tennessee St., McKinney, TX 75069.
3. A city inspector will verify the space meets fire, building, and zoning code requirements for your specific business use.
4. Once approved, you receive your CO — keep it on file, as your landlord or lender may request a copy.

Typical timeline: 5–15 business days after the city inspection is completed, depending on business type and space condition.

Fee: Varies based on business type and square footage. Confirm the current fee schedule on the McKinney Development Services website before submitting.

Important: If you are moving into a space where a previous tenant operated, you still need a new CO in your business's name. The prior tenant's Certificate of Occupancy does not transfer to a new business.

Step 3: Get a Home Occupation Permit (Home-Based Businesses)

If you run your business from a residential address in McKinney, you must obtain a Home Occupation Permit from the city before you start operating — even if clients never visit your home.

Key requirements under McKinney's zoning ordinance:

• Business activity must remain secondary to the residential use of the property.
• No business signage is permitted at the residential address.
• Only household residents may work at the home location — outside employees are not permitted on-site.
• No customer or client traffic to the residential address is allowed.
• Business inventory must not be stored in a way that is visible from the street or neighboring properties.

How to apply:

1. Visit mckinneytexas.org and navigate to Planning & Development → Permits.
2. Complete the Home Occupation Permit application and pay the applicable fee (confirm the current amount on the city website).
3. Most standard home occupation applications are reviewed administratively — a physical inspection is not always required.

Common mistake: Assuming "working from home" means no city permits are required. McKinney's zoning ordinance requires a Home Occupation Permit regardless of how small or low-profile the business is.

Step 4: Register for a Texas Sales Tax Permit

If your McKinney business sells tangible goods or taxable services anywhere in Texas, you must register for a Texas Sales Tax Permit with the Texas Comptroller — before your first sale.

• Fee: Free to register.
• Where to apply: comptroller.texas.gov/taxes/permit/
• State rate: 6.25%; McKinney may add a local rate on top — check the combined rate using the Comptroller's rate lookup tool before collecting tax from customers.
• Filing frequency: Assigned by the Comptroller based on your expected tax liability — monthly, quarterly, or annually.
• Penalty for late returns: $50 per return + 5%–10% of tax owed.

Once registered, you must file sales tax returns on schedule even if you had zero taxable sales that period. See our full guide to the Texas LLC sales tax permit for step-by-step filing instructions.

Quick reference

Frequently asked questions

Does McKinney, Texas require a business license?

No. The City of McKinney does not issue a general city-wide business license. However, most businesses still need a Certificate of Occupancy (for commercial locations) or a Home Occupation Permit (for home-based businesses) before they legally begin operating. These are permit requirements, not licenses, but they carry the same legal weight.

How long does it take to get a Certificate of Occupancy in McKinney?

Most standard CO applications take 5–15 business days after the city inspection is completed. Businesses that require fire marshal review or significant build-out work may take longer. Submit your application as early as possible — you cannot legally open at a commercial address until the CO is issued.

What happens if I operate in McKinney without the required permits?

Operating without a Certificate of Occupancy or required city permit can result in stop-work orders, daily fines, and forced closure until you come into compliance. For food-related and health-service businesses, additional enforcement authority applies through separate licensing agencies. It is always less expensive to get the permits before opening than to deal with fines and closures afterward.

Do I need a sales tax permit to do business in McKinney?

Only if you sell taxable goods or services. If you provide professional services that Texas classifies as nontaxable — such as most consulting or legal work — you may not be required to collect sales tax. The Texas Comptroller publishes a full list of taxable services at comptroller.texas.gov. When in doubt, consult a CPA familiar with Texas sales tax law.

Does a McKinney home-based business need to form a Texas LLC?

These are two separate decisions. You can operate as a sole proprietor without forming an LLC, or you can form an LLC for liability protection — either way, you still need the Home Occupation Permit from the city. See our guide on how to form a Texas LLC if you are weighing your entity options, and our Texas LLC compliance checklist to understand all ongoing obligations once you do form one.

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Disclaimer: This guide is for general informational purposes only and does not constitute legal or tax advice. Permit requirements vary by business type, change over time, and may differ from those described here. Confirm current requirements directly with the City of McKinney and the Texas Comptroller before relying on this information.

Last verified: 2026-06-09

Sources:

• City of McKinney Development Services
• Texas Comptroller — Sales Tax Permit
• Texas Comptroller — Sales Tax