It takes time to learn the lingo when approaching a new endeavor, so don’t feel bad if your question “How do I get an LLC license?” isn’t technically accurate. An LLC is actually a type of business entity (like a corporation or partnership) rather than a license. However, licensing IS critical to your company. Let’s break down how you can start your LLC as well as determine what licensing it will need.
Give birth to your LLC
In this process, it can help to think of your limited liability company (LLC) as a baby. The LLC is the legal entity itself, which you’ll create by filing paperwork with your state. Rather than a birth certificate, this paperwork is usually called your LLC’s “Articles of Organization” (though some states may instead use the term “Certificate of Formation” or “Certificate of Organization”).
The state (like a hospital) will charge you a fee for this, which you can look up on our LLC costs page.
Name your LLC
Before you get your Articles of Organization, though, you need to name your “baby” by giving your LLC a name. It must conform to your state’s rules for naming LLCs. These will vary by state, but you can count on your state to require that your LLC’s name be different from all other business names in your state.
You’ll also be required to include a “designator” in your business name that indicates that it’s an LLC. These also vary by state, but most states accept “limited liability company,” “LLC,” or “L.L.C.”
Name a registered agent
You’ll also need to appoint a registered agent. If a process server or the state needs to reach your LLC to deliver service of process for a lawsuit or other official notices, they need to be able to deliver the notice in person to an individual or company that’ll accept the notices on behalf of your person. That person/or company is known as a registered agent, and every LLC is required by law to have one.
Draft an LLC operating agreement
Though operating agreements are not legally required by all states, it’s highly recommended that you create an operating agreement to establish the rules that’ll govern the business structure of your LLC. An operating agreement puts into writing how much of the company each member (owner) owns; how the company will be managed; how profits will be divided and distributed; what happens if a member leaves or needs to be removed; how the company will be dissolved; and much more.
Get an EIN from the IRS
Instead of a Social Security number, your “baby” (the LLC) will likely need an Employer Identification Number (EIN). This is a unique number you’ll get from the IRS, and you’ll need it to open a business bank account or hire employees. It’s also a requirement if your small business has more than one owner. You’ll use this number when filing taxes.
Preparing Your LLC: Securing Licenses and Permits for Success
Like preparing a nursery for your new baby, obtaining licenses and permits is an essential step when starting an LLC. This process ensures that you create a safe and compliant environment for your business to thrive and grow. Without the right licenses and permits, you could face fines, a loss of reputation, having your business temporarily or permanently shut down, or even losing the liability protection and tax benefits an LLC would otherwise provide.
So, how do you know what licensing you need? Here’s where it gets complicated. The kind of licensing you need varies by location; federal, state, county, and city may all have specific requirements. Another variable is your industry. Licensing for a restaurant will be very different than licensing for an at-home consultancy.
Some of the additional licenses an LLC may need include:
- General business license – Some locations require you to have a separate license just to do business at all. This often happens at the county or city level, but some states also require a general business license.
- Professional license – Certain occupations, such as medicine, law, and engineering, require up-to-date professional licenses to legally operate.
- Employment – Businesses with employees will have to register for things like unemployment insurance and worker’s compensation.
- Seller’s permit – Most states will require this permit for your LLC in order to collect sales tax on goods you sell.
- Health – If you serve food, you’ll likely need a health inspection certificate.
Those are just a few. Depending on the type of business, an LLC might also need an alarm permit, weights and measures registration, and other permits/licenses if it’s a beauty salon, daycare center, sells firearms or liquor, etc. There are also taxes you’ll have to register for, depending on your location.
So, how are you supposed to know if you have all the licensing your LLC needs? A business license report can help.
We’ve partnered with Avalara to help you conduct a federal, state, county, and city search, based on your business activity and location, seeking out any permits, business licenses, and tax registrations you’ll need to legally operate. They then round up those applications and send them to you as a business license report with instructions on how to fill them out and where to send them upon completion.
We can help!
Our team can help you with filing the papers for your LLC, securing an EIN, and many other services to help you start, run, and grow your business. Chat with one of our business experts today to see how we can help.
Disclaimer: The content on this page is for informational purposes only, and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
LLC License FAQs
An LLC isn’t a license, but a business entity type like a corporation or partnership. The cost of forming an LLC varies greatly by state and depends on a variety of factors. At a minimum, all states require a filing fee for the Articles of Organization (or similar document), and these filing fees can range from $50 to more than $500 depending on your state.
The pros of an LLC are that it offers limited liability protection for the owners like a corporation, but without the double taxation, excessive paperwork, and rigid management structure of a corporation.
The cons are that it does require more paperwork and fees than an unregistered business like a sole proprietorship (though a sole proprietorship offers no personal liability protection). Compared to a corporation, an LLC is more difficult to raise money for because it can’t sell shares.