A limited liability company (LLC) is a business structure allowed by state laws. It offers several benefits to business owners, such as the protection of personal assets and flexible taxation. However, you must obtain a business license to operate your LLC legally. An LLC business license proves that your company is registered and recognized by your state government. In this post, we will discuss further what a business license is, how to get one, and what additional licenses and permits you can get in California and Texas.
LLC Business License
An LLC is a legal business structure that offers members personal liability protection. It is a business structure, not a license to engage in a regulated activity. An LLC license is an unofficial term used to describe the paperwork creating a limited liability company. No actual license is required to form an LLC; an LLC doesn’t give you a business license. Instead, an “LLC license” proves that you run a company registered as an LLC with your state. The legal document that establishes an LLC is called the Articles of Organization. Once this form is filed with your state and any other required documents and filing fees are paid, your LLC is an active business. You can use those articles of organization as a de facto LLC license.
A business license is a permit issued by the government that allows you to engage in certain business activities. It is required to open a business and allows your business to operate in your state or locality. A business license may also refer to specialized licenses and permits that allow your business to perform certain services or operate in certain locations.
As the owner of an LLC, if you don’t have the licenses and permits your state requires, you could be forced to close down your business. Also, running a business without proper licensing could jeopardize your personal liability protection. At a minimum, you’ll have to pay fines and penalties for not obtaining the proper authorizations.
How to Get an LLC Business License
Obtaining an LLC business is a beneficial move for a company, and you can get one by considering the following steps:
#1. Register With State Agencies
You may need to register with any state where you conduct business activities. This is because most states require registration with the Secretary of State’s office, a business bureau, or a business agency.
#2. File for Foreign Qualification
If your LLC conducts business activities in multiple states, you might need to file for a foreign qualification in other states where your business is active. To qualify as a foreigner, file a Certificate of Authority with the state. Many states also require a Certificate of Good Standing from your state of formation. Each state charges a filing fee, but the amount varies by state and business structure
#3. Register With Local Agencies
You might need to file for licenses and permits from the county or city. Some counties and cities also require registering your trade name if you use one. Local governments determine registration, licensing, and permitting requirements, so visit local government websites to learn what you need to do.
#4. File Articles of Organization
To create your LLC, you’ll need to file articles of organization with your state. The information required varies from state to state, but you typically only need to provide the name and address of your LLC and the names of its members. Once you’ve completed the form, fill it out with your state and pay the filing fee.
#5. Obtain a Business License
You can typically get a business license online by applying to your business’s correct licensing or regulatory agency. Business licensing requirements generally depend on your business’s activity and location (i.e., zoning requirements).
#6. Maintain Compliance and Active Status
After registering your LLC, make sure to keep it compliant and in active status on the state’s website. This may include filing biennial reports, paying taxes, and maintaining a registered agent for your business.
#7. Consider Additional Licenses and Permits
Depending on your business activities, you might need additional permits or licenses, such as health department permits, zoning permits, home occupation permits, and professional licenses. Some states require a seller’s permit to conduct sales.
LLC Business License California
California has no general state-level business license, but your LLC may need other licenses and permits depending on your industry and location. Examples of business licenses and permits for California LLCs include the following:
- Articles of Organization: To form an LLC in California, you must file the LLC Articles of Organization with the California Secretary of State. The filing fee for this is $70.
- California business license: California doesn’t require a general business license at the state level. However, you may need to obtain certain licenses and permits depending on your industry and location.
- California Seller’s Permit: If your LLC sells goods or services subject to sales tax, you may need to register for a Seller’s Permit to collect and pay those taxes. The Seller’s Permit is free and doesn’t need to be renewed if you continue paying your business taxes on time.
- Municipal Licenses and Permits: Depending on your LLC’s location and industry, you may need to obtain municipal (city, county, etc.) business licenses or permits to operate legally. You should check with your local municipality for guidance on required licenses and permits.
- Occupational Licenses: Some regulated occupations in California require a special service license. California’s online resource, CalGold, can help determine the types of permits your business might need.
- Building Permits and Health License Permits: You may need health license permits depending on your business’s activities. However, the exact process and requirements depend on the city and industry.
- Foreign LLC Registration: If you have an LLC formed in another state but want to conduct business in California, you must register that out-of-state LLC in California. This is known as a foreign LLC registration.
LLC Business License Texas
Registering your LLC with the state of Texas officially forms the business and provides the state with basic information about your company. To get an LLC business license in Texas, consider the following:
- Choose a unique name for the LLC. Your LLC name must be distinguishable from the names of other business entities in the state
- Put “LLC” in the name. Texas law requires the inclusion of “Limited Liability Company” or “Limited Company” in the name.
- A registered agent is required. All LLCs operating in Texas must have a registered agent.
You can also consider getting additional licenses and permits. The Texas Economic Development Office offers a comprehensive Texas Business Licenses and Permits Guide PDF, which includes all licenses in Texas. To determine which licenses and permits apply to your LLC, you can use the search tools provided by the Texas Economic Development Business Permit Office, contact your local municipality, or hire a company to assist you. Here are some examples of licenses and permits a Texas LLC might need:
- Sales tax permit
- Occupational license
- Municipal permit
- Federal license
- Professional license
- Industry-specific license
Do I Need a Business License in the USA?
You may need a business license in the USA depending on the type of business you are operating, its location, and the specific industry it falls under. Most businesses need one or more licenses to operate legally, whether at the local, state, or federal level.
To determine the type of license you need, consider the following factors:
- Local, state, and federal levels: Licenses and permits can be required at different levels of government.
- Industry: The type of business license you need will ultimately depend on your industry and business location.
- Occupational licenses: In many states, business owners in certain occupations need to secure a specific type of license to operate legally.
Can I Start an LLC in the US?
Yes, you can start an LLC in the United States even if you are not a US citizen. Non-citizens can form an LLC if they meet the Internal Revenue Service’s (IRS) guidelines. Green card holders, also known as permanent residents, are protected by all laws of the United States and can start a business following the laws of their state. However, forming an LLC in the US does not grant you any visas to work in the US. If you plan to manage the LLC from within the US, you may need a valid work visa.
To start an LLC in the US, you need to follow these steps:
- Select a state to form your LLC.
- Register your LLC with the chosen state
- Obtain an Employer Identification Number (EIN) from the IRS.
- Set up a physical US mailing address.
- Open a dedicated US bank account and ensure your new US company is legally compliant.
- Hire a registered agent if the state requires and maintains annual report filing fees and any annual franchise or operating taxes levied by your state.
- Draft an operating agreement outlining the management structure and rules for your LLC.
How Much Does It Cost to Open an LLC in the USA?
The cost to open an LLC in the USA varies depending on the state, the formation method, and additional services. Here’s an estimate of the costs:
- State filing fees range from $35 to $500, with the average cost of around $132 as of 2023
- If you use an online formation service, you’ll pay an additional $39-$79 for basic filing or more if you upgrade your formation package or have the service act as your LLC’s registered agent.
- Hiring an attorney to help with the formation can cost a flat fee between $1,000 and $1,500, depending on the complexity of your business and the state in which you form.
- Publication fees may be required in some states (Arizona, Nebraska, and New York), ranging from $40 to $2,000.
- Additional up-front costs may include filing your business name application, obtaining a business license, permit fees, and annual fees for keeping the LLC compliant with federal and state laws.
In most cases, LLC registration can be completed for between $200 and $800, with ongoing annual maintenance costs typically ranging between $300 and $500.
What States Do Not Allow LLCs?
All 50 states in the United States allow the formation of limited liability companies (LLCs). However, not all states permit the formation of series LLCs, a popular business structure for investors and business people due to their versatility and broad benefits.
The following states currently permit the formation of series LLCs: Delaware, Texas, Tennessee, Utah, Nevada, Illinois, Oklahoma, and Iowa. California is the only state that does not allow the formation of an in-state series LLC.
If you live in a state that does not permit series LLCs, you may still form a series LLC by registering your LLC in one of the states that permits them and then registering it as a foreign entity in your home state. This process is legal and allows you to take advantage of the benefits of series LLCs.
What State Is Best for a Single Member LLC?
The best state for a single-member LLC depends on several factors, including the complexity of the registration process, state-specific requirements, and tax implications. Delaware is known for its simplified filing procedures and business-friendly environment. It is considered one of the best states to form a single-member LLC. However, it’s crucial to evaluate your business situation and consult legal counsel before deciding on a state.
Are LLCs Legal in All States in the US?
Yes, limited liability companies (LLCs) are legal in every state in the US, but each state has its own statutes that govern and regulate them. Each state may have different regulations, so you must check with your state if you want to start an LLC. Only a few types of businesses, such as banks and insurance companies, cannot generally form LLCs.
What State Is Best for Anonymous LLC?
When considering the best state to form an anonymous LLC, New Mexico, Delaware, Nevada, and Wyoming are the most popular choices due to their strong privacy laws and favorable business environments. However, the best state for your anonymous LLC depends on your company’s needs and where you’ll transact business.
Related Articles
- COMPANY LIABILITY INSURANCE: What Is It & How It Works
- HOW MUCH IS A BUSINESS LICENSE: What You Need To Know and Free Tips
- DO I NEED A BUSINESS LICENSE? : The Need to Get a Business License
References
