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Why Do You Need an LLC License?- How To Form

Max Smith

Reading Time: 6 minutes

You may get excited to start a business. But do you know if you need an LLC registration and an LLC license to run your business with comfort? An LLC (Limited Liability Company) provides tax benefits and limited liability for its members.

An LLC license is mainly the certification of an LLC. Some legal documents prove that an LLC has a legal identity and helps to run a business. The license differed depending on the LLC and business type.

Let’s read more to understand the LLC formation and licenses in depth.

An unofficial term, “LLC license,” usually indicates the official papers of your LLC. There is nothing like an LLC license.

The articles of organization are the most crucial document when forming an LLC. If you file the documents with state fees, you complete the registration. So, the official documents become evidence of your LLC and become the LLC license.

So, any document that indicates your LLC is valid and legal can be your LLC license.

How Do I Get an LLC License?

Getting a license for your LLC is easy. You can follow the simple steps shown below for a proper way to get a license for your next LLC.

Step 1: Manage the LLC Paperwork

You may need some essential documents to represent your LLC for license approval. The most crucial one is “The Articles of Organization.” It contains important documents and details about the members. There is also another document called “Operating Agreement.” So submit all the necessary documents to the state secretary. It will show that your LLC can do business in the selected state.

Step 2: Submit Your Application

Are all the papers ready? It’s time for submission. Now, fill out an official form. Then, submit the necessary documents with the condition. Plus, you may pay the required fees. Some of the states accept submissions online or by mail. Also, some of the states will allow only in-person submissions. So contact your state officials to know the rules correctly.

Step 3: License Approval Period

The required period to accept your application is variable. Not all the agencies take the same time to approve your submission. It will be best if you apply with the proper documents. So there will be no rejection, and you will get approval fast. Otherwise, they may change the time to fix the mistakes and again submit the application.

Plus, sometimes states have limits on providing licenses. In that case, you will get a permit once the state again offers it. So, you must research the period to approve your submission and make a proper plan.

Step 4: Maintain Compliance

Your LLC must maintain license renewal rules. You may need to show annual reports and updated documents. Plus, pay associated fees to renew your license. The license expiration period can be annual or biennial.

Is an LLC a Business License?

LLCs and business licenses are not the same. But both are necessary to run an LLC business.

A limited liability company is the complete form of an LLC. It’s the structure of starting a business with the benefit of limited liabilities for its members. It can be one or multiple-member LLC.

You may need various licenses to run your LLC in a specific state. You might submit various documents during registration. When you get the approval documents, it becomes your LLC license. But that’s not enough!

You may also need more licenses based on the state and business type.

Do not mix an LLC with its license. A license is indeed needed to operate an LLC. But form an LLC first, and then you can apply for a license because you must provide your LLC name while applying for a license.

It’s best to contact your state official. So, you will get all the information you need regarding licenses to run your business in that state.

Types of LLC Licenses

There are mainly 3 kinds of LLC licenses. They are:

  • Federal license
  • Local business license
  • State business license

Your LLC can be based on a single member or multiple members. It differs in matters of taxes and debts. You may need different support for different types of LLCs.

1. Federal License

Usually, small businesses don’t require federal licenses. The companies deal with products that the federal government regulates. So, they may need federal permits to run a business. The industries that require federal permits are shown below:

  • Transportation
  • Agriculture
  • Cargo
  • Broadcasting

Not all of the agencies provide all kinds of licenses. So you must apply to the right agency for the permit. For example, the U.S. Department of Transportation will give you a license for transportation business.

You must visit the agency’s website and apply online for a license. Isn’t it simple?

2. Local Business License

Most small businesses need a local license. But contact your county office for more details. There are several types of local licenses. They’re shown below.

  • Cleaning License
  • Tobacco License
  • Peddler’s License
  • Health License
  • Food License
  • Operating License
  • Vendor License
  • Signage License

Get the license that matches your business.

3. State Business License

Your LLC must have a state license if it hires professionals. For example, doctors, lawyers, mechanics, and more. You can apply online for the state license. They will need verification of your LLC and other documents, like your EIN or TIN.

How to Form an LLC

Forming an LLC is easy if you know how to do it. Almost all the states have a basic structure for forming an LLC. Follow the steps shown below to form an LLC in almost every state.

  • Choosing a state
  • Name selection
  • Articles of organization
  • Operating agreement
  • Registered Agent
  • EIN
  • Open a business account
  • Gain permits and licenses

Connect with your state officials to learn more about the requirements for forming an LLC in your state.

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Conclusion

Hopefully, you understand the importance and types of LLC licenses. If you forget to obtain a license, your LLC will violate the law. Government or state officials may shut down your LLC and charge you money. So start your LLC only after you have the licenses.

Frequently Asked Questions

How much will it cost to get an LLC license?

It’s not fixed. The cost may vary from state to state. But usually, it will cost around $50. It’s the average cost. Contact your state’s responsible officers to learn the details and cost of an LLC license.

What do I need to renew my LLC license?

Yes, if it’s about to expire soon. The most common is renewing the license annually. The validity of a license may vary from state to state. There are regulatory agencies that will send you notifications before your license expires.

Is a DBA license necessary for my LLC?

It depends on your state’s rules. In some states, a DBA license is crucial, but in other states, it is different. DBA means doing business. It’s all about getting a fictitious name without changing the official name of your LLC.

Do I need a license, though I have a foreign LLC?

Yes! You must get a license to operate an LLC in the desired state. Whichever state you choose to perform and run your LLC in, you need a permit from the officials of that state. In some states, there are no requirements to get a license.

Is there any difference between the business license and the seller's permit?

Yes, there is a difference. The meaning of licenses and seller permits is almost the same. But there are some specific differences. A business license means evidence of operating an LLC in an area. On the other hand, a seller’s permit provides permission to engage with the sale aspect. Plus, it builds up relations with tax collection agencies.

Max Smith - LLC Formation

He is a seasoned entrepreneur and legal expert at LLC Formation Hub. With a stellar track record in both business and law, Max simplifies the complexities of LLCs. His practical insights, featured on LLC Formation Hub, empower entrepreneurs across the USA. Max merges business finesse with legal acuity to guide businesses toward success.


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