Is a Business License Needed to Form an LLC?

Forming an LLC usually doesn't require a business license, but requirements vary depending on the type of business where the business is located.

Ready to start your business? Plans start at $0 + filing fees.

Trustpilot star rating bar
is a business license needed to form an llc

Contents

Updated on: September 19, 2024
Read time: 4 min

When starting a business, you need to take many steps, which vary depending on the type of business you're going to operate. You'll usually need a business license to start a business but not to form an LLC.

Can you have an LLC without a business license?

In most states, forming an LLC doesn't require a business license, but you'll need to follow your state's procedures.

An LLC requires registering with the state and filing the appropriate forms.

But even though you don't need a business license to form an LLC, you probably need one to operate the LLC as a business.

When do you need a federal business license?

Whether you need a business license depends on various factors, such as the location and the type of business you want to start. Depending on the type of business, you may need town or city, county, state, or federal licenses.

Only certain types of businesses require a federal license. These businesses include those that engage in:

  • Mining and drilling
  • Nuclear energy
  • Alcohol manufacturing, importing or selling
  • Aviation
  • Fishing and wildlife
  • Commercial fisheries
  • Agriculture
  • Firearms, ammunition, or explosives
  • Maritime transportation
  • Radio and television
  • Transportation

When do you need a local business license?

If the business you wish to run is not on the shortlist of federally required licenses, it's likely you'll need to get a license from your city, county, or state. The website of your secretary of state or other government office might tell you what licenses you need at the state level. It's a good idea to check with your city and county offices to see whether you need additional licenses.

Because most businesses need at least one business license to operate, start with the presumption that you'll need one. The following businesses require a business license in most states:

  • Restaurants
  • Childcare centers
  • Hair and nail salons
  • Dry cleaning
  • Mechanics
  • Insurance agencies
  • Electricians
  • Plumbers

Check with your state and local government offices to determine whether your type of business requires a general business license. If it doesn't need a general license, your business may require some other type of license.

What type of license does your business require?

Your business will need a license or permit, or both, based on several factors. For example, if you're running your business from your house, you'll have to ensure that zoning ordinances permit a home business and, if so, whether you can have customers or clients visit your house. Some other necessary licenses and permits, aside from general business licenses, include:

  • Professional licenses for vocations such as accountants, attorneys, therapists, veterinarians, and physicians
  • Licenses based on the type of industry, such as hotels or construction, which also usually require permits
  • Sales tax licenses
  • Fire, health, and other emergency services licenses or permits
  • Pollution control permits to protect the environment
  • Zoning and building permits
  • Licenses to use signs
  • Licenses to operate under another name, such as a "doing business as" (DBA) company

An income tax employer identification number (EIN) also is usually required.

 

man-reviewing-work-at-desk- with office supplies

Why do many businesses require a business license?

Business licenses have many purposes, including informing the public that the business is legitimate. Some of the other reasons behind requiring business licenses or permits include:

  • Protecting public safety and health
  • Prohibiting certain businesses from being conducted from your home
  • Prohibiting certain types of business from being located near other types of businesses or buildings
  • Holding the business accountable for liability purposes
  • Allowing taxing authorities to keep abreast of sales and income tax
  • Reassuring the public that your professional status is legitimate

If you're required to get a business license or permit but fail to do so, you may have to pay fines, penalties, or both, and you risk having your business closed.

How to file for a business license

First, check whether your business qualifies as a small business for licensing purposes with the Small Business Administration (SBA). If it does, try to apply for licenses according to the SBA's requirements.

Next, research what your state requires. At the state level, check with your state's website to see what licenses and permits they require for your business type.

Finally, check with your county or city office to see whether they require any additional licenses or permits. You can have an attorney check for you, or you can do it yourself.

While it's not difficult to file for a license or permit, thoroughly check all offices—federal, state, county, and city or town—to ensure that your business is properly licensed. When it is, you're ready to take the next steps to opening your doors.

 

Ready to start your business? Plans start at $0 + filing fees.Start My LLC
Twitter logoFacebook logoLinkedIn logoReddit logo

This article is for informational purposes. This content is not legal advice, it is the expression of the author and has not been evaluated by LegalZoom for accuracy or changes in the law.

5 days ago
Trustpilot star rating bar

Piece of Cake!

Wow, if I had known HOW EASY it would be to create my own LLC I would have done it months ago! I literally created my own business in MINUTES. LegalZoom takes all of the fear, confusion, guesswork and administrative burden out of starting your own business. Strongly recommend it!

Lori Ann Farrell
9 days ago
Trustpilot star rating bar

Excellent, rapid, economical LLC formation…

Legal Zoom enabled me to very quickly and economically set up my LLC

Sarah Collins
10 days ago
Trustpilot star rating bar

They made creating my llc such an easy…

They made creating my llc such an easy process and gave me plenty of options. I genuinely never even thought of. So happy I had this option.

Cassaundra Eckleberry
13 days ago
Trustpilot star rating bar

Filed my LLC confidently thanks to LegalZoom

Sittie answered all my questions and made me feel much more confident about forming my LLC this morning. Including some basic tax questions that she was able to answer. So greatly appreciate her help.

Cassandra E
24 days ago
Trustpilot star rating bar

LegalZoom was great to start my first LLC

LegalZoom was great to start my LLC! The process was simple and easy! Very fast as long as you know what you want your name to be and what your business is doing. Highly recommend for the people that like to do it themselves online. Great experience

Bruce. M
28 days ago
Trustpilot star rating bar

Out-of-State LLC Business Formation

I was at a standstill with no resolution in sight - LegalZoom fixed me up within minutes & made filling the Out-of-State business form LLC-5 with the State of California, easy! Thank you!

Cheryl Williams
57 days ago
Trustpilot star rating bar

Legalzoom help me set up my LLC efficiently. The instructions were simple, and I had a positive experience overall.

Legalzoom made starting my LLC fast, easy, and stress-free.

CoreSpan Technologies
35 days ago
Trustpilot star rating bar

legal Zoom Concierge

legal Zoom Concierge agent, Jelly, called me and walked me through the process of selecting how I wanted to set up my LLC with through explanations. I recommend using the Legal Zoom concierge for customers not yet familiar with the process of creating and LLC.

CC
104 days ago
Trustpilot star rating bar

Was very easy to use and I got my LLC…

Was very easy to use and I got my LLC the same day. I was SHOCKED. I know every state is different but it was like a miracle. Thank you LZoom!

Erica Walters
105 days ago
Trustpilot star rating bar

My experience has been excellent from…

My experience has been excellent from the first day opening my LLC, and continues to be great now that my business is thriving. All of my important documents are organized and secured on their sight. Which is amazing when getting loans and doing my taxes. They also provide great customer service every time I call with questions. Would highly recommend using LegalZoom. Plan to start another business and will be using them again. Thank you LegalZoom!

George Wells
111 days ago
Trustpilot star rating bar

Five Stars For LegalZoom

LegalZoom offers a streamlined and accessible platform for creating an LLC, simplifying complex legal procedures for entrepreneurs. Their user-friendly interface and comprehensive guidance ensure that even individuals without legal expertise can confidently establish their businesses. Overall, LegalZoom enhances efficiency and provides valuable support in the LLC formation process.

CLC
Rated4.6out of 5 based on24,967+ reviewson

Showing our favorite reviews