LLC License: Everything You Need to Know
An LLC license is the paperwork that indicates that you have successfully created and set up a limited liability company.3 min read
An LLC license is the paperwork that indicates that you have successfully created and set up a limited liability company.
A limited liability company is a business that allows for certain personal and financial liability protections for all owners or members of the business. The business is one that does not pay taxes to the federal government like a corporation. Instead, the profits are placed on the members’ personal tax returns and are reported as income.
LLC formation must occur under the governance of state laws and the individual members will need to file documentation with state governments so the LLC can be approved and operation.
This is often referred to as obtaining an LLC license.
When a business applies for an LLC status through the state, they will need to choose a unique name that distinguishes them from other business entities in the state. The applicant or LLC business will also need to create and file forms that indicate the owner, owners, or members of the business. The individual who is appointed the resident agent and the type or nature of the business will need to be included on paperwork. Also, documents called articles of incorporation will need to be filed.
Most of the states in the country require your LLC to obtain liability insurance and to show proof of insurance before the business is approved. Also, a tax identification number must be acquired and provided. Almost every state requires a fee for the filing of the paperwork. This fee can vary from state to state.
Effect of Registration
Once the paperwork is filed and the state approves the LLC, the business is able to complete business transactions in the state. At this time, the LLC will have a unique legal identity that allows the business to own land, sell products, incur debts, draft and sign contracts, and speak politically.
States often require the LLC to follow rules and regulations that keep financial records and accounts separate from personal ones. The LLC may need to hold meetings as well on a regular basis between members.
States do allow the LLC to operate in the state where the application is accepted. However, the business must draft and filed documents to become a foreign LLC if the business intends to complete business transactions in other states.
Foreign LLC filings are similar to LLC authorization paperwork, but they are typically much simpler since the business already exists. You will need to fill out never paperwork, submit a fee, and provide certificates that show the business is active and in good standing.
Dissolving an LLC
If members or owners of the LLC decide that the business should no longer remain active and operate, then a dissolution process must take place. This is a formal one that must follow specific procedures.
Dissolution requires paperwork and filing with the state. Also, creditors must be notified that the LLC will no longer be a business entity. After the dissolution, the LLC can no longer operated as a limited liability company. A reorganization may be required if you still want to run your business. The dissolution also may mean that you will need to refile for licenses and permits under the new business.
What You Need to Do After Forming an LLC
If you do develop your LLC and want to keep it in good standing, then you will need to file an annual report with the state government in which you do business in. You must also keep up with quarterly tax payments. While it may seem easy to stay up to date on paperwork needs, you should mark these things on your calendar. Also, it is a good idea to work with a registered agent as well as a professional accounting team to ensure that you are meeting paperwork deadlines.
There are some businesses that also send out alerts and notices that inform you of the deadlines and upcoming dates for required paperwork filing. Since the filing is necessary to keep your LLC in good standing and free of fines, it is best to come up with a plan to ensure that the dates are not missed.
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