Are you planning LLC formation in California, or have you already filed formation documents with the Secretary of State? Then it is a good time now to think about business licensing.
Almost all businesses need to obtain one or more licenses, which can be stipulated at any level of government. In this article, we will answer these and some other pertinent questions related to licensing in California.
Licensing in California
What is a License?
Although once the Articles of Organization is approved, the process of LLC incorporation is considered to be finished, in most cases, it is not enough. Generally, before an LLC can start operating, it has to obtain a government document confirming its right to do business – a license. The condition for obtaining one is meeting all applicable local, state, and federal requirements as well as the number, type, and cost of licenses – depending on the type of business and the industry you choose.
A general business license is not required in California. However, licensing requirements may be stipulated at the county or city level.
The most common licenses are:
Building and zoning permits;
Seller’s licenses, required for LLCs selling taxable goods or services;
Professional licenses required for professionals such as builders, accountants, doctors, etc;
Signage permits, etc.
Can Incorporation Services Help with Obtaining Licenses?
There are few ways of starting an LLC in California – the easiest of them is to hire professional LLC services in the industry. For a reasonable fee, they will take care of all your business licensing needs.
LLC creation services make sure you don’t miss anything important. They will do comprehensive research at the local, county, state, and federal levels to find the licenses provided for your LLC. In addition, you will receive all the necessary forms, which can be filed either through business formation services or on your own.
What is the Correlation Between a License and an LLC?
Does Getting a License Replace LLC Formation? Licensing is part of the LLC incorporation process, but one does not replace the other. A license is a document that confirms the right to do business on a certain territory. As for LLC formation, the process involves approval by the Secretary of State of the Articles of Organization – the company’s legal document.
If you formally opened an LLC but did not get a license before starting a business, it exposes the company to fines and other penalties from the state. The reverse situation is more favorable. If you have licenses but have not yet registered an LLC company, you can legally conduct business as a sole proprietorship.
At what Stage of the LLC Formation Should I Get a License?
Since the license form needs to include the name of the business, you should not file it before the official LLC incorporation. Haste could lead to additional costs if the Secretary of State rejects your formation documents for any reason. Thus, the license should be obtained after business formation but before the start of commercial activities.
Do I Need a Separate License for Online Sales?
Online sales are very popular these days. It is a convenient, economical, and practical way of doing business. But does such a business require a license?
Yes – according to the law, a license is a prerequisite for any LLC company, regardless of its size or the presence of a physical storefront.
The situation concerning online sales made by a regular store should be mentioned separately. If you obtained a license after LLC incorporation and started working, and then decided to sell your goods or services online, no additional permission is required.
After LLC formation, every state-registered company has to comply with current requirements. One of the key requirements for an LLC company is the presence of all statutory licenses. After reading this article, you know what the main types of licenses are there in California and how to apply for them. Of course, when LLC incorporation is officially completed, you probably can’t wait to start making your first deals. However, it is important to follow the procedure and get all statutory licenses and permits beforehand to avoid state sanctions.
Dmitriy Kondratiev, chief Editor of LLC.services, associate in Axon Partners. Lawyer in Intellectual Property, Patenting, Contract law, Labor Law, International Private Law. Worked with IT-companies Webxloo (Delaware), Autoxloo (Florida) and SCC (Delaware).