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

By Joseph Scrofano

State laws for business licenses vary, and states, cities and counties often also require separate business licenses. Businesses must conform to a variety of other tax, zoning and regulatory requirements to legally operate in a specific state, county and city. Most states require the business pay a filing fee to get the license and an annual fee to keep the license current. Whether a business needs a license usually depends on what type of business it is, not whether it's an LLC.

LLC

Limited liability companies, or LLCs, are a type of business organization. LLCs are like partnerships in that the owners can also manage the business, and are like corporations because of their limited liability protections for owners. LLCs can also choose the manner in which they get taxed by the IRS -- either like a corporation or like a partnership, or sole proprietorship for single-member LLCs.

Business License

A business license is a document from the state and/or local government authorizing a company to conduct business in that jurisdiction. In some fields, like law and medicine, separate organizations issue professional licenses with their own requirements, like bar associations and medical boards, respectively.

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Type of Business

State laws do not usually impose specific requirements that LLCs obtain business license -- the type of business it is dictates whether it needs a license, not how the business is organized. For example, the District of Columbia requires that hair salons and barbershops obtain a business license. It does not matter whether the business is an LLC, a sole proprietorship or a corporation -- if it charges people money for haircuts, it need to obtain a business license from the Department of Consumer and Regulatory Affairs.

Penalties

States and local governments may impose varying degrees of penalties for businesses that get caught operating without a license. For example, in Washington, operating a business without a license is a criminal penalty. It is a gross misdemeanor that can carry a penalty of fines and jail time. In Nevada, the penalty for operating a business without a license carries a fine of up to $250 for each offense, as of January 2011.

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Difference in Business License & Registering a Business
 

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