60% of Americans start businesses to be their own bosses. Are you hoping to be one of them? Then you need to study up.
Becoming an entrepreneur isn’t easy, especially since you’re depending on yourself. And it’s not all fun and games either; you have to make sure all your ducks are in a row before opening your doors.
Those creating a limited liability company (LLC) might be wondering about business licenses and which they need to obtain. For example, is an LLC a business license? Keep reading to discover the answer and additional relevant information.
Is an LLC a Business License?
The short answer is no, an LLC isn’t a business license.
This is because an LLC is a type of business structure, as opposed to a corporation. It provides limited liability protection to its owners (also members), so their personal assets are protected from the company’s debts and liabilities.
To form an LLC, you’d register it with the state in which it operates. You can use our business registration service if you don’t like administrative work. Our services are affordable and remove the headache from doing it yourself.
On the other hand, a business license is a permit issued by a government agency that allows you (or your company) to conduct business within its jurisdiction. These are typically given out on a city or county level.
So what is the difference between an LLC and a business license? The former is a legal entity type, while the latter is a regulatory requirement.
Do I Need a Business License?
In general, LLCs don’t necessarily need business licenses to operate. In fact, you don’t even need to form an LLC to operate a business. However, we’d highly suggest you do, especially if you’re a freelancer.
With that said, most states handle licenses for LLCs. The federal government does as well though, so here’s the difference.
Federal Business Licenses
On a higher level, you’ll have to apply with the federal government if you’re in these industries:
- Agriculture
- Alcoholic beverages
- Aviation
- Firearms, ammunition, and explosives
- Fish and wildlife
- Commercial fisheries
- Maritime transportation
- Mining and drilling
- Nuclear energy
- Radio and television broadcasting
- Transportation and logistics
Fortunately, your federal business license will be valid in every state. But there’s a good chance that you’ll need additional state and local licenses as well.
State Business Licenses
As for state business licenses (also known as general business licenses), these are the states where you definitely have to apply for one:
- Alabama
- Alaska
- Delaware
- Hawaii
- Maine
- Maryland
- Nevada
- Tennessee (only if your gross receipts are $10,000 or more)
In most situations, you’ll apply for a state business license through the Secretary of State. Do note that you may have to apply through the state tax department in some places.
Local Business Licenses
This is where things get confusing: you might be required to get both local and state business licenses. Or you may have one instead of the other.
The best way to know what to do is to speak with your local government. It’ll have officials that can walk you through the next steps.
Other Business Licenses to Consider
The requirements for each LLC will be different since they’ll be in different industries and locations. However, here are some other licenses and permits you might have to get:
- Professional licenses
- Sales tax permit
- Health permits
- Building permits
- Environmental permits
- Signage permits
- Zoning permits
Which Should You Get First?
There’s no right way to do this, but for the best results, you should form your LLC first before applying for business licenses. As we’ve said earlier, LLCs offer their members limited liability protection, so the wisest move is to have this protection before you do anything else.
In addition, keep in mind that business licenses aren’t good forever. Not only will you have to renew them periodically, but you’ll probably have to pay an annual license fee too. Make sure to take care of these responsibilities promptly, or else you’ll get hit with late fees, a permanent suspension of your business license, or a forced dissolution of your LLC, depending on your location and situation.
Get the Right Licenses for Your LLC
The answer to the question, “Is an LLC a business license?” is “No.” Comparing the two is like comparing apples to oranges; you can have one without the other.
Most industries will require at least one LLC business license though, and it may be at either a local/state level or at a higher federal one. This means it’s vital to research and comply with all licensing requirements if you want to avoid legal trouble later on.
Sign up with Business Anywhere now to start an LLC. Leave all the paperwork to our experts, who will finish the process in a few days.
