Hi, I’m Bette Hochberger, CPA, CGMA. If you’ve started a business—or are thinking about it—you’ve probably heard the term LLC tossed around. But what exactly is an LLC license? And do you really need one?

Let’s break it down so it’s simple and clear.

What Is an LLC?

LLC stands for Limited Liability Company. It’s a popular business structure that combines some of the best features of a corporation and a sole proprietorship. The main reason business owners choose an LLC? Liability protection.

When you operate as one, your personal assets (like your house or savings) are generally protected if your business gets sued or ends up in debt. That’s a huge deal.

So… What’s an LLC License?

Here’s where the confusion comes in. There’s technically no such thing as an “LLC license”—not in the way people often think of it.

When people say “LLC license,” they usually mean the formation of an LLC through your state, which gives you the legal right to operate under that structure. What you actually get is:

  • An Articles of Organization (filed with your state)
  • An EIN (Employer Identification Number, from the IRS)
  • An operating agreement (if required)
  • And sometimes a Certificate of Formation from the state

All these documents together allow your company to function legally, open business bank accounts, sign contracts, and more.

Do You Need One?

That depends on what you’re doing.

You should consider forming an LLC if:

  • You want to protect your personal assets from business liability
  • You’re earning money beyond a casual side hustle
  •  You’re taking on clients or selling products/services
  • You’re bringing in partners or investors

You might not need one yet if:

  • You’re testing out a small idea and not making much money
  • You’re just freelancing occasionally and prefer to file as a sole proprietor (though you still can form an LLC!)

An LLC Isn’t a Business License

Important: Forming one doesn’t replace other licenses or permits. Depending on your business and location, you might still need:

  • A local business license
  • A sales tax permit
  • A professional license (for certain regulated industries)

There’s no magic “LLC license,” but forming one gives your business legal recognition and a layer of protection. If you’re running a business, earning money, or want to look more professional, forming an LLC could be a smart move.

Still unsure if you need one? Schedule a meeting with us, we can help guide you based on your specific situation.

I hope you learned something new today. As always, stay safe, and I’ll see you next time.