A Limited Liability Company (LLC) is a common business structure in the United States allowing its owners (ie members) to separate personal assets from their business liabilities. This creates a "corporate veil" thereby protecting personal assets from any unpredictable financial loss or legal issues.
A business license is the permission to operate in the stated profession and jurisdiction as issued by at the appropriate goverment agency. The government agency may be at the international, federal, state, and/or local. Some businesses may need multiple types of licenses in order to operate their business.
No, a LLC is not a business license.
A common question among new business owners is, "Is an LLC a business license?" The answer is no. An LLC provides a legal framework for your business, defining its structure, ownership, and liability protections. In contrast, a business license grants you the legal permission to carry out your activities in a specific location. Depending on your industry and location, you may need multiple licenses and permits to comply with local, state, and federal regulations.
Many entrepreneurs mistakenly believe that forming an LLC is the only legal requirement to start operating. However, it's essential to understand that an LLC does not replace the need for a business license, if a business license is required. Note that in some cases the business license may be the legal requirement whereas the LLC is not.
Some professions are highly regulated at the state and/or federal level. For example, law firms in some states may have be structured as a PLLC instead of LLC as well as have the credentials to practice in state. Review your state specific requirements and any federal requirements for your profession in terms of what is required for your business entity structure and licensing.
It depends. If you have a LLC, you may or may not need a business license.
While forming an LLC provides a legal structure for your business, it doesn’t eliminate the need for a business license. A LLC is meant to help owners to protect their personal lives from legal obligations or financial loss that arise from the company’s operations. Whereas, acquiring the appropriate business license is needed for your business to remain in compliance with local, state, and federal authorities and laws.
When trying to figure out what business licenses your business needs, you will need to consider the state the business will operate in, the profession, the county and city required local permits, and as well as any federal level requirements.
Different states have different licensing requirements based on the type of business and location. Refer to your state's website and administration usually the Secretary of State to better understand what is required in your state. Consult with similar professionals as yourselves or legal consult is something we've found helpful since the state requirements can change from time to time.
Some industries are more regulated than others and may have industry-specific licencing requirements. These industries include healthcare, financial services, construction, and logistics services to name a few. Ensure your business meets industry-specific regulations to avoid legal issues.
In addition to state licenses, you may need local permits to operate your business. This is particularly true for larger metropolitan areas. For example, restaurants in Boston are required to have something called a sidewalk cafe permit in order for their outdoor seating where appropriate. Businesses in SF are also subject to a local gross receipts-based tax. Check with your city or county government to determine the necessary permits for your location.
Some professions like trucking will also have federal requirements set forth by the federal level governing body. In the case of motor carriers, those requirements are set by the Department of Transportation (DOT) and Federal Motor Carrier Safety Administration (FMCSA).
Not necessarily. If you have a business license, in some cases you may not need LLC, though it depends on your state and profession.
LLCs are not necessarily required for your business, unless your state requires as such. In some cases, with the appropriate business license, a LLC is not needed; and you can operate as a sole proprietorship, if desired.
Alternatively, your business may be better suited for alternative business entity structure depending on business needs and state requirements ranging from a Professional Corporation, normal C Corporation, and/or partnership.
Note that some states do have requirements on what business structure a business can take based on what industry the business is in. One such example is the legal profession.
No, forming an LLC does not replace the need for a business license. Depending on your location and industry, you may need multiple licenses and permits to operate legally.
Research your state and local government websites to find information on required licenses. Some professions may have federal level requirements issued by the government agenc(ies) overseeing that industry. If additional help is needed, consult with an attorney with a track record serving clients like you and your industry.
Usually you can, but that may come at a cost, which can get expensive. There are various services that are out there to help specific to each industry. Since licensing varies from industry to industry, it’s important to consult with experts in the appropriate subject area.
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