Business Licenses LLC: Everything You Need to Know
A special LLC business license is not necessary unless required by your state or the local government3 min read updated on February 01, 2023
Sometimes, business licenses LLC combinations are necessary. A special LLC business license is not necessary unless required by your state or the local government. Deciding the business structure needed is at the top of the decision-making list when forming your company.
Considerations When Forming an LLC
An LLC is a popular choice for many small business owners. One of the reasons for choosing an LLC is members do not have to be concerned about personal liability as they do with a corporate structure.
Individual states regulate any LLC in their region. The LLC is not recognized as being a legal structure, the way a corporation is recognized when filing federal taxes.
At tax time, income tax returns are not filed as a company. The income passes from the company to each member who, in turn, will file an individual tax return to pay income and self-employment taxes.
Several steps are required when forming an LLC. These include hiring a registered agent who receives and handles legal paperwork for the company and filing the Articles of Organization with the state. Check state law requirements to find out if there is any license needed. License requirements are due to your type of occupation, which may require a specialized license.
When operating as an LLC, you have the option to file taxes as an individual, corporation, or partnership. An LLC is considered a "disregarded entity" and has no federal tax classification.
Recommended Steps to Form an LLC
- Become familiar with your state laws regarding the formation of an LLC. Many states have set the age of 18 as the requirement to form an LLC. Your state may or may not have residency requirements.
- Select a name for your LLC. Check your state's registry to ensure the name is available and is not already in use by another business.
- Complete required forms and pay all filing fees.
- Verify the requirements in place in your state when choosing a name. You may be required to include either "LLC" or "Limited Liability Company" in the name. Also, specific words may not be allowed.
- Find your state requirements for a business license. You must register with the tax agency for your state for income tax and sales tax, if applicable.
- File taxes using your social security number, if you're a sole owner. If the LLC has more than one member, there is the option to file as a corporation. Filing as a corporation requires an Employer Identification Number (EIN).
Considerations for Getting a Business License
Before a company can open its doors for business, most local governments require a company to have the necessary permits and/or licenses. A business license permits a company to do business. The type of business license you may need depends on where you operate and the type of industry your business covers.
The process of applying for the business license can be time-consuming to find the right license and permit. It can be a complicated and overwhelming process, as well.
If a company is operating without the benefit of the appropriate license or permit it can lead to negative consequences such as notices, penalties, and not being allowed to operate the business.
When forming your business, you may find there are zoning restrictions that may interfere.
A home-based business usually requires only a local permit versus a state or federal license.
As an employer, requirements to operate a business vary by business type and location.
A few examples of the licenses or permits that may be needed include a "doing business as" or DBA certificate, sales tax receipt, home occupation permit, signage permits, and health permit.
Business licenses are generally renewed annually.
For information about business licenses, contact your local Better Business Bureau.
Types of Business Licenses
A few examples of the types of businesses that require a permit or business license include:
- General business licenses
- Health department permits
- Health permits
- Liquor licenses
- Lottery licenses
- Reseller's licenses
- State-issued occupational licenses
- Tax registrations
- Zoning and land-use permit
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