Do You Have to Get a Business License with an LLC?

By Brette Sember, J.D.

Do You Have to Get a Business License with an LLC?

By Brette Sember, J.D.

It's common for a state, county, or city to require a business located in that area to obtain a license to do business. In fact, you may need a license from more than one of these governmental bodies. Other common regulatory requirements include taxes and zoning permissions. Not all types of businesses are required to have a license to operate though.

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What Is an LLC?

A limited liability company (LLC) is a business structure you can select to provide some protection from liability for the owners, called members, of which there can be one or many. When you create an LLC, you have a choice as to how you want the entity to be taxed. LLCs can choose to be taxed like a sole proprietorship or partnership, where the members report profits and losses on their individual income tax forms rather than the LLC itself paying taxes. An LLC also has the option of choosing to be taxed like a corporation, in which case the LLC must file its own taxes.

Business Licenses

A business license is issued by a state, county, or city and authorizes a business to operate in that jurisdiction. You'll need to check with your own state, county, and city to find out if business licenses are required by any or all of them, as requirements vary by location.

Obtaining a business license requires you to complete a form and pay a fee. You then receive a certificate granting you permission to conduct business in that area. If you're practicing in a professional field like medicine or law, there are likely additional professional licensing requirements defined by your professional board or licensing agency that you must comply with.

Who Needs a Business License?

Whether you need a business license depends not on your business structure but on your type of business and the local requirements. Simply because you have structured your business as an LLC does not mean that you need a business license. Instead, specific types of businesses are often required to be licensed in order to do business. For example, in the District of Columbia, hair salons and barbershops must be licensed, whether they are sole proprietorships, partnerships, LLCs, or corporations.

Penalties

If your local government requires your type of business to have a business license and you do business without one, you can be subject to penalties and fines. For example, in Nevada, there is a fine of $1,000 to $10,000 if you operate a business without a required license. Fines can be repeatedly levied if your noncompliance continues. Because of this, it's essential to research what is required in your area to ensure you are in compliance.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.