Does an LLC Need a Business License?

LLC business licenses are a crucial component of starting your own company. No matter where you’re located, there’s a pretty good chance you’ll need to get at least one business license.

But sorting through all the different types of business licenses can feel overwhelming. In this guide, we’ll talk you through a wide variety of different licenses so you can easily figure out which ones you’ll need.

What’s the difference between an LLC and a business license?

A limited liability company (LLC) is a type of business entity that registers with the state. It gives personal liability protection to its owners like a corporation while still being pretty easy to manage, much like a sole proprietorship or general partnership.

In contrast, a business license is a permit obtained by a business from a regulatory agency. Many LLCs hold business licenses, but not all business licenses are held by LLCs. Some businesses are held by corporations, limited partnerships, and other business entities.

What kinds of licenses do I need for an LLC?

Technically, not every LLC needs a business license to be a legal, compliant business. But there’s a very good chance that your LLC will need at least one license or permit; there are lots of different kinds of licenses and permits. Let’s talk through some of the common business licenses.

Federal Business Licenses

Generally speaking, the federal government leaves a lot of licensing up to the states. But there are some types of businesses that require a license from a federal agency. According to the U.S. Small Business Administration, you’ll need a federal license if you’re involved in one of the following activities:

• Aviation
• Manufacturing, selling, importing, or wholesaling alcoholic beverages
• Selling or manufacturing explosives, ammunition, or firearms
• Any activity related to fish or wildlife
• Commercial fishing
• Ocean transportation or shipment
• Mining and drilling on federal lands
• Nuclear energy processing or facilitation
• Broadcasting for radio or television
• Oversize vehicles

Federal licenses will be honored in every state, but keep in mind that states may require other licenses on top of federal requirements.

State Business Licenses

A state business license is often called a general business license because it’s required for all business entities operating in that state. In some states, the general business license is administered by the Secretary of State. But a few states administer this license through their tax department.

A minority number of states require a general business license at the state level. But if your state is one that requires it, you’ll need to acquire that license right away. Here are the states that currently require a general business license on the state level:

• Alabama (called the business privilege license)
• Alaska
• Delaware
• Hawaii (called the business excise tax license, administered by the Department of Taxation)
• Maine
• Maryland
• Nevada
• Tennessee* 

*If your Tennessee business has gross receipts of more than $3,000 but less than $10,000, you’re required to get a minimal activity license from your county and/or municipal clerk. Your company needs a standard business license from your county and/or municipal clerk if your gross receipts are $10,000 or more. 

These states all require a license, but check with your state government to learn where you apply for the license. Sometimes you’ll get the statewide license through a probate office, your Secretary of State, or even a county clerk. Your state agency or city office can tell you more about where to apply as well as how much your business license application costs.

Local Business Licenses

Depending on your municipality, you might need a county business license or city business license, too. These requirements can apply instead of — or on top of — state license requirements. It all depends on your business location. You should consult with your city and county government offices to check what the requirements are in your area.

If your LLC has multiple locations in different cities, you’ll likely need to check with the city government in each spot. Every location should complete a business license application for its municipality.

DBAs

DBAs, short for “doing business as” names, aren’t a license type in the traditional sense of the term. But they also give you permission to operate under a different name than your LLC’s legal name, so we’re including it here.

A good number of states require you to register your DBA if you want to use one. A few don’t require registration, too. Also keep in mind that some states call this registration a trade name, a fictitious business name, or an assumed name. Often, you’ll need to renew your DBA annually or every few years to keep using it compliantly.

Sales Tax Permits

If your business activity includes the sale of qualifying goods and services, then you’ll be subject to sales tax. More specifically, you’ll be required to collect sales taxes and pass them on to your state’s revenue department. That process often requires you to get a sales tax permit. Of course, this requirement only applies in states that charge a sales tax.

Typically, it’s easy to obtain this permit from your state’s revenue department. Dodging sales tax requirements or collecting them without a permit is illegal, so be sure to register before you’re up and running.

Professional Licenses

Many industries and trades require licenses to practice. Lawyers, nurses, medical doctors, dentists, chiropractors, general contractors, architects — these are just a few of the many trades that have licensing requirements.

Technically, an LLC can’t hold a professional license; it’s a business structure. Instead, every member of the LLC (or employee) who practices a regulated profession needs to have the appropriate license. Be sure that you and your people keep their occupational licenses up to date.

Zoning Permits

If your LLC will have a physical location, you’ll likely be affected by zoning laws. Zoning laws regulate what kind of activity can happen on a given piece of land. For example, certain parcels of land are designated as retail space, others as industrial space, and some might be specific for residential areas. Some areas can be multi-use.

Zoning is usually governed at the local level, such as your city or county. If you want to start a physical location, you may need a zoning permit. This permit can help ensure that your business presence complies with local ordinances.

Building Permits

Similar to a zoning permit, it’s not uncommon to need a building permit before you can construct something. These permits are typically governed by your city. Some locations might even require you to get a building permit for something as simple as building a retaining wall or remodeling an existing building.

If in doubt, consult with your city government to make sure you’re complying with any requirements.

Environmental Permits

In certain cases, an LLC’s work can have an impact on the environment around it. For example, a construction project might affect a local water source, or a grading project could adversely affect erosion rates. In these cases, the LLC may need to get an environmental permit.

Environmental permits don’t just give you permission to proceed with your work. They also give you a set of regulations to adhere to so the negative impact of your activities is kept to a minimum. It’s somewhat common for certain large manufacturers (commercial fisheries, car manufacturers, etc.) to need an environmental permit because they contribute to pollution in their area. LLCs might need these additional licenses, too, depending on their business activities.

Health Certificates

LLCs involved in handling, serving, or making food will likely need to obtain health permits. The exact areas that require licensure vary from one state to another. We highly recommend consulting with your state’s health department to check what the requirements are in your area.

Employee-Related Licensing

When you hire employees, you’re required to complete lots of steps, such as handling income tax withholding and getting workers’ compensation insurance. In some states, you can actually self-insure for worker’s compensation — provided your state gives you license to do so. Usually, these requirements don’t apply if you’re only working with independent contractors. 

Another important step is obtaining a federal employer identification number (EIN). This isn’t exactly a license type, but it’s a business registration step you have to complete, so we’re including it here. You can obtain one for free with the IRS. 

Signage Permits

Will your LLC be posting signage? It’s pretty common for states to require a permit for fixed signs and billboards posted alongside major roadways. If you’ll be advertising on a billboard or posting a sign in your parking lot, be sure to check with your city or state governments to get a permit for your sign.

Weights and Measures Registration

How often do you buy a pound of deli meat or a few gallons of gas? When that gas was pumped or that coffee was packaged, a machine measured it to ensure you got a fair unit for your purchase price. State governments often require registration of measuring and weighing equipment so they can be regularly inspected.

If you’ll use scales, counting machines, or other measures to sell your product units, you’ll need to register. This process helps protect state consumers by ensuring vendors use accurate measurements.

Renewing Licenses and Permits for Your LLC

You aren’t set for life the moment you apply for your business licenses. With the vast majority of these licenses, you’ll need to renew them on a regular basis and pay an annual license fee. For example, with a lot of state general business licenses, you have to renew them every year.

When you first start out, we recommend making a list of the licenses you have, along with when they expire and any renewal fees you can expect to pay. 

Penalties for Not Having or Renewing Licenses for Your LLC

Failing to maintain licenses required by your state, county, or city can spell trouble for your business. At a minimum, you may find yourself faced with late fees. Or you might face more serious penalties like a permanent suspension of your professional license or administrative dissolution.

The consequences vary depending on your state, the license in question, and some other factors. If in doubt, inquire with your licensing authorities to learn more.

We can help!

Business licenses can feel overwhelming, but you don’t have to go it alone. Our helpful business license report can simplify this process for you. Just answer a few questions about your business, and we’ll compile a list of the licenses and permits you need to operate legally from the get-go.And that’s not the only way we can help. We’ve also got your back for red tape like maintaining a registered agent, staying compliant, and more. With our help, you’ll be able to focus on what really matters: your business. Need more information on how to get an LLC License? Check out our blog post!