Is a Business License Needed to Form an LLC?

By Salvatore Jackson

A limited liability company, or LLC, is a form of business organization popular among individuals looking to start a new business. Starting an LLC simply requires filing a document, generally called an “articles of organization," with your state’s business registration entity. While obtaining a business license is not a requirement for starting an LLC, you may need to register your LLC with your state’s tax agency and obtain occupational licenses before operating your LLC as a business.

Basic Requirements

While state laws vary, the only requirement for forming an LLC is that the person organizing, or starting, the LLC be of the age of majority, which is typically 18 years old. Almost all states have abolished residency requirements, which required a person to be a state resident in order to form an LLC in that state. All states require you to designate a registered agent, a person or business that will receive service of process if your LLC is sued.

Forming an LLC

An articles of organization document generally needs to include your LLC's name and designate a registered agent for service. Some states require you to indicate the purpose for which you are organizing your LLC. States may also require you to disclose how your LLC will be operated and the names of individuals who will be managing your LLC. The cost of registering an LLC can range between $50 and $350.

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Tax Registration

After forming your LLC, most states require you to register your LLC with the state tax agency. Typically, you will need to do this if your LLC will be engaged in commerce that sells taxable goods or will be hiring employees. Depending on the state, you will need to pay taxes on income received by the LLC in the state or a flat annual fee for maintaining an LLC in the state.

Occupational Licenses

While state and local requirements vary, states and counties may require you to obtain a business license in order to operate your LLC as a business in that area. Additionally, you may need to obtain other licenses from state, county and city governments for maintaining certain types of businesses, such as a liquor store or a firearms store. These licenses, while necessary in order to operate your business, are separate from the process of creating and registering an LLC, which is a legal entity.

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How to Operate a Business As a Single-Member Limited Liability Company

References

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How to Register a Sole Proprietorship Business in Fulton County, Georgia

If you come up with a winning business idea, you may decide to go into business for yourself. The simplest business form to enter the business world is a sole proprietorship. Sole proprietors are basically an extension of the individual and consist of you simply executing your business plan. It lacks most of the formality of other business entities like corporations and is extremely easy to establish. Although the state of Georgia does not require sole proprietors to obtain a statewide business license, Fulton County, Georgia requires sole proprietors to obtain a Business Occupational Certificate, which is also required for other business entities like a corporation. This certificate can be obtained from the Fulton County Business Occupational Tax Division, located at the Fulton County Business License Department or the Fulton County Finance Department.

The Cost of Setting Up an LLC

Costs are an important consideration when deciding to set up an LLC. Because each state has its own LLC laws, the amount and type of costs vary considerably depending on where you form the LLC. All states have a mandatory fee to file the LLC formation document, but further costs may also be incurred for publication, licensing or franchise tax fees that are necessary to complete the state’s LLC formation requirements.

How Much Does It Cost to Form an LLC?

Compared to a corporation, limited liability companies are relatively inexpensive to start. LLCs are regulated by state limited liability laws, with those laws enforced by the secretary of state or a similar type of agency. The start-up costs of forming an LLC vary by state. Fees for LLC formation include those for document filings, expedited services and required LLC activities.

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