Is a business license needed to form an LLC?
It is not necessary to have a license in order to start an LLC but the requirements may vary based on the location and nature of business. There are some important steps that LLC owners must take in order to properly establish a sound and strong LLC.
Can you have an LLC without a business license?
In most of the states it is not legally required to have a business license to start an LLC but at least the owners must understand the legal procedures of LLC formation in various American States.
According to the law of a state LLC owners need to register with the state and file the appropriate forms of incorporation. Although you do not need a business license to form an LLC but you do need a license to operate LLC as a business.
When do you need a federal business license?
When you are thinking to operate and start an LLC you need license which depends upon several factors. The owners of LLC have to understand the requirements of location, nature of business, town or city and state information that federal requires related to the license.
There are only a few businesses that require a federal license some of them are,
- Fisheries and wildlife
- Commercial fisheries
- Agri-business
- Firearms, ammunition, or explosives
- Maritime transportation
- Radio and TV
- Transportation
- Mining and drilling
- Nuclear energy
- Alcohol manufacturing, importing or selling
- Aviation
When do you need a local business license?
When you are starting a business that does not require a federal license then chances are you will require licenses from your county, city or state. You need to enquire through the website of secretary of state or other government office about specific state-based licenses LLC or business owners require to legally run a business.
This is but natural that every entrepreneur or an LLC owner thinks there is always need of license to operate a business. Therefore, here is the list of particular business licenses required by most of the states,
- Restaurants
- Childcare centers
- Hair and nail salons
- Dry cleaning
- Mechanics
- Insurance agencies
- Electricians
- Plumbers
You need to check with state and local government offices about the kind of licenses your LLC or business requires in general to start it. If there is no generic requirement of any license then you need to search for particular licenses according to the states where you wish to operate.
What type of license does your business require?
The requirements of business license depend upon several factors. Let’s say, you are running an LLC or any business from your home then you have to ensure that you have the zoning ordinance permit, that will also display that customers or clients can visit your house for business purpose. There are some other general business processes that are necessary for operating legally and efficiently,
- You will require professional licenses if you are an accountant, therapist or a physician.
- You will also require industry-based licenses hotels, construction, consultancy or any other.
- Sales tax licenses
- License and permit for fire, health and other emergency services.
- Permits related to pollution control zoning and building permits license related to usage of any sign
- Requirements of license related to operating under any other name.
- You also need income tax employer identification number EIN to operate in a legal way.
Why do many businesses require a business license?
License is required to show the legitimacy of a business or an LLC. Besides this, here is the list of other important reasons for license requirement to operate a business,
- Protection of health and safety of public.
- Prohibition of particular businesses operating from home.
- Prohibition of certain businesses operating near particular businesses or buildings.
- Licenses help legal authorities to properly audit the business for liability purpose.
- Timely payment of taxes.
When any state, town or county requires you to have a business permit and license then it is important to get one because failure to have a license can land you in hot waters. You may need to pay fines and penalties for risking your business to be closed permanently.
How to file for a business license
First of all, you need to check that whether your business qualifies to become or to be declared as a small business and then apply for a license according to the requirements of Small Business Administration SBA.
Then you need to check the permits and business licenses that a state requires. You can do this by contacting with secretary of state’s office. You can do this by visiting the official website of the state to see what kind of licenses and permits your business require.
Lastly, check for the licenses and permits required at the county and city level. These can be some additional business licenses and permits that specific counties and cities require in various States.
It is not a difficult process to apply for a business license and permit all you need to do is contact with the government authorities at Federal, state, county, city and town-level to make sure that what kind of general and specific permits and licenses they require. Once you have achieved the license and permits then your LLC or business is ready to take the next steps of operating as a legal entity.