Key Takeaways

  • An “LLC license” is not a formal state-issued license—it generally refers to the documentation proving your LLC is legally registered.
  • Forming an LLC involves filing formation documents (usually Articles of Organization) with your state and meeting naming, registered agent, and fee requirements.
  • Even after forming an LLC, you may still need local business licenses, permits, and tax registrations to operate legally.
  • LLCs provide limited liability protection, pass-through taxation, and operational flexibility compared to corporations.
  • State and local laws vary—always verify licensing requirements for your specific industry and location.

If you're wondering, "what is an LLC license," you should first understand what an LLC is and the steps you have to take to form one. Failure to file the proper paperwork with the appropriate offices in your state can cause major setbacks in your plans to begin operating a domestic LLC.

What Is a Limited Liability Company?

A limited liability company, or LLC, is a specific kind of business structure that provides the company's owners with special protection from being held personally liable for the legal and financial obligations of the company. A limited liability company is not required to pay taxes because the company's financial gains are reported on the owner's personal taxes.

Creating a limited liability company is regulated by local state laws. Members need to file specific documents with appropriate state offices, such as the Secretary of State in most states, to be approved for operation. In simple terms, the limited liability company business structure is less complex than other options. It is also much more flexible than other popular structures, such as the C-corporation and S-corporation.

Creating a limited liability company provides other benefits as well, such as:

  • Pass-through taxation
  • Limited liability
  • Protecting the personal assets of the owners

The LLC business structure is fairly popular among people who are interested in starting a new company.

Starting a limited liability company is generally a simple matter of filing a document known as the articles of incorporation with the appropriate state office. In most cases, this will be your local Secretary of State. In most cases, it isn't a requirement to obtain a business license to start a limited liability company. However, it may be necessary to register with the local state tax agency and gain an occupational license before you can operate your LLC under certain circumstances.

What Is an LLC License?

While people often ask “what is an LLC license,” there is technically no state-issued license called an “LLC license.” Instead, this phrase commonly refers to the official approval or documentation showing that your limited liability company has been legally formed with your state. When you file Articles of Organization (or a similar formation document) and your state approves it, you receive confirmation—sometimes a certificate of formation or certificate of organization—which serves as proof that your LLC exists as a legal entity.

However, this approval alone does not grant you the right to operate any type of business. Depending on your location and industry, you may still need:

  • Local business licenses (city or county) to operate legally.
  • Professional or occupational licenses for regulated fields (e.g., real estate, health care, construction).
  • Special permits for activities such as serving food, selling alcohol, or operating a home-based business.

In short, your “LLC license” is really your LLC registration, and it is just one piece of your overall compliance requirements.

Formation of an LLC

While every state has its own specific laws that regulate how an LLC is formed, they also have a few similarities. When business owners apply for limited liability company status, they are required to have a company name that is unique and easily distinguishable from the name of any other company currently doing business in their state.

Business owners must also file a standardized form that is issued by the state and contains the following information:

  • The owner's identity
  • The company's resident agent
  • The nature of the company

This document should be filed with the state, along with the company's articles of incorporation. Some states also require the company provides some or all of the following:

Specific laws vary from state to state, but generally, the only requirement to form a limited liability company is the organizer is of legal age. In most states, this means that the organizer needs to be at least 18 years old. However, regardless of the state you intend to do business in, your company will be required to designate a registered agent. A registered agent may be either a natural person or another company that agrees to receive legal correspondence on behalf of the company in the event that legal action is taken against your business.

LLC License vs. Business License

It’s important to understand the difference between an LLC license and a business license. Forming an LLC is about creating a legal business entity that separates your personal and business liabilities. This is done at the state level through Articles of Organization and payment of filing fees.

A business license, on the other hand, is a separate authorization—issued by your city, county, or state—that allows you to conduct specific business activities in compliance with local regulations. Some businesses need both an LLC registration and one or more business licenses or permits before they can operate.

Example: If you form an LLC to open a restaurant, you’ll need to file LLC formation paperwork with your state and obtain local health permits, food service licenses, and possibly a liquor license before opening your doors.

Effect of LLC Registration

Once you've gained appropriate approval, your limited liability company will be authorized to conduct business anywhere in your state of organization. A limited liability company is considered its own distinct legal entity, which means the company is able to do a number of things in its own name, such as:

  • Accruing financial debt
  • Owning and leasing land
  • Purchasing and selling items
  • Entering into binding contracts
  • Taking a political stance

In most states, your LLC will be required to follow certain formalities, such as keeping a set of financial records that are separate from those of the owners' and holding corporate meetings.

State and Local Licensing Requirements

After your LLC is officially registered, you must determine what licenses and permits are required to operate legally. Requirements vary widely depending on:

  • Your business location – Some cities and counties require general business licenses for all entities.
  • Your industry – Professions such as accounting, legal services, medical care, and construction often require state-issued professional licenses.
  • Your business activities – Selling goods may require a sales tax permit; serving alcohol requires a liquor license; operating a home business may require a home occupation permit.

Failing to secure the proper licenses and permits can lead to fines, forced closure, or legal penalties. Always research both state and local rules before starting operations.

Forming an LLC

Fewer filing requirements mean that LLCs enjoy quite a bit more freedom than other business structures, such as corporations. LLCs can come in a number of different variations, including:

Additionally, LLC members can be any of the following:

  • An individual
  • A corporation
  • Another LLC
  • A foreign entity

Maintaining Your LLC License and Compliance

Once you have formed your LLC and obtained all necessary licenses and permits, you must keep them active to remain in good standing. Common ongoing compliance requirements include:

  • Annual or biennial reports to the state, along with applicable fees.
  • License renewals for any local or professional licenses.
  • Tax filings at the state and federal levels.
  • Updating your registered agent information if it changes.
  • Keeping accurate records to demonstrate compliance in case of audits.

Staying on top of renewals and filings helps protect your limited liability status and prevents disruptions to your business operations.

Frequently Asked Questions

  1. Is an LLC license the same as a business license?
    No. An LLC license refers to proof of your LLC’s legal formation, while a business license is a separate authorization to operate your business in a specific location or industry.
  2. Do all LLCs need a business license?
    Not always, but many do. Requirements depend on your location, industry, and activities. Always check state and local rules.
  3. What documents prove I have an LLC license?
    Typically, your state will issue a certificate of formation or organization once your LLC is approved. This serves as proof your LLC exists.
  4. Can I operate my LLC without a business license?
    Only if your location and industry do not require one. Operating without required licenses can result in fines or closure.
  5. How often do I need to renew my LLC license?
    While the LLC formation itself doesn’t expire, you must file periodic reports with your state and renew any applicable business or professional licenses as required.

If you need help with what is an llc license, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies such as Google, Menlo Ventures, and Airbnb.