What Is an LLC License?

By Kevin Owen

A limited liability company is a type of business structure that shields the owners of the company from personal liability for the financial dealings of the operation. An LLC does not pay federal taxes since the profits are only reported on the owner's tax return as personal income. The creation of an LLC is governed by state law and members must file certain documents with the appropriate state department to gain approval to operate as an LLC.

Formation

Although each state has its own laws and regulations governing the formation of an LLC, they have many similarities. Businesses applying for LLC status are required to have a name unique from any other business incorporated in the state. Applicants are also required to file a standard form issued by the state identifying the owner and resident agent of the company as well as the nature of the business along with the LLC's articles of incorporation. Many states also require the company to file proof of liability insurance and federal tax identification numbers. Most states also require payment of a filing fee.

Effect of Registration

Once approved, the newly formed LLC is authorized to conduct operations state-wide. It gives the company its own legal identity enabling it to accrue or incur debts, own and lease land, buy and sell items, enter into contracts, and engage in political speech. Most states require LLCs to follow the formalities of maintaining separate financial records from the owner's personal expenses and to hold corporate meetings.

Ready to start your LLC? Start an LLC Online Now

Foreign LLCs

Although an LLC is authorized to engage in business in the state in which it registered, it must also file a registration form to operate as a foreign LLC in other states in which it intends to conduct activities. This filing process is usually simpler than forming an LLC as it only requires the payment of a fee and the filing of a form with the new state along with a certificate from the company's home state showing the company is in good standing.

Dissolving an LLC

If business owners determine that they no longer want to operate the company as an LLC, or wish to shut down the operations altogether, the business must follow formal procedures dissolving the LLC. These procedures require the filing of appropriate forms with the state as well as notifying creditors of the dissolution of the company. Once the LLC status is dissolved, the company no longer has the privileges of operating as a limited liability company and may need to reorganize and obtain other business licenses in order to continue operations.

Ready to start your LLC? Start an LLC Online Now
How to Use an LLC for Vehicle Ownership

References

Resources

Related articles

Forms Needed to File for an LLC in the State of Delaware

Required forms necessary for the formation of a limited liability company in the state of Delaware greatly depend on whether or not the applicant is registering for the first-time, converting to an LLC, making changes to existing records to keep an existing LLC valid in the state or applying to revive status as a LLC. Delaware provides an array of self-explanatory forms that are available for public download from its Department of State: Division of Corporations website (see Resources) to meet those needs.

A Comparison of an LLC, Sole Proprietor, S Corp, & C Corp

Once the decision to form a business has been made, the founders must consider the type of business they wish to form, such as an LLC, sole proprietorship, S corporation or C corporation. While state law governs the formation and operation of these business types, several of these entities have basic characteristics that are the same from state to state. In addition to determining in which state you wish to create your business, there are several factors to consider - like liability and taxation – when deciding the best form for your business.

How Often Must You Renew a 501(c)(3)?

Running a nonprofit organization requires strict adherence to both state and federal laws. And if your organization pursues federal 501(c)(3) tax exempt status, you must go through a cumbersome application process with the Internal Revenue Service. However, once you have been approved, your organization does not need to renew its 501(c)(3) exemption.

LLCs, Corporations, Patents, Attorney Help

Related articles

Incorporating Vs. LLC

One of the most important initial decisions in starting a business involves deciding what type of business entity your ...

Is an Operating Agreement For an LLC Public Record?

A limited liability company, or LLC, is a flexible form of business association popular among individuals looking to ...

How to Change an LLC Filing as an S Corp to a Sole Proprietor

A limited liability company, or LLC, is a business structure defined by state law which protects its members from ...

A Professional Corporation vs. an LLC

Starting a new business is a big undertaking that requires making many decisions. Once you have developed a vision for ...

Browse by category
Ready to Begin? GET STARTED