Module 5: Licenses and Compliance

Business Licenses and Permits

Forming an LLC gives you a legal entity; it does not give you permission to do business. Licenses depend on what you do and where you do it, at three levels. State level: many professions need a state license — contractors, cosmetologists, real estate agents, food handlers, childcare providers, and dozens more. Some states also require a general business license or tax registration just to operate. Local level: cities and counties often require a general business license or home-occupation permit, plus zoning clearance if customers come to your location. Federal level: only specific industries (alcohol, firearms, aviation, broadcasting, and a few others) need federal permits — most small businesses never touch this level.

• Check state, county/city, and (rarely) federal levels — most misses happen at the local level.
• Professional and trade work almost always needs a state license on top of the LLC.
• Record every license's cost, renewal date, and issuing agency in one place.

Licenses are separate from the LLC and from each other — they renew on their own schedules and lapse on their own. Missing a license renewal can mean fines or a stop-work order even while your LLC is in perfect standing. Calendar everything the day you learn about it.

Annual Reports and State Fees

Almost every state charges you to keep the LLC alive. The annual report (some states call it a statement of information or annual registration) is a short filing confirming your LLC's current details — name, registered agent, principal address, members or managers. In New Jersey it's filed online each year and the current fee is $75. Miss it and the state can administratively dissolve your LLC, which yanks the liability wall out from under you without you noticing until something goes wrong.

• Learn your state's report name, fee, and due-date rule — they differ everywhere.
• Separate the annual report from any franchise/minimum tax — different filings, different deadlines.
• Set reminders two weeks early; reinstatement after dissolution costs more than the original fee.

If you move the business to another state or stop operating, don't just abandon the LLC — file a formal dissolution (or withdrawal, if it's registered as a foreign LLC elsewhere). An abandoned LLC keeps accruing annual fees and penalties in most states, and the state will happily bill a company that no longer exists.

Record-Keeping Basics

Good records are your proof that the LLC is real. Keep a single folder — physical, digital, or both — holding your filed Articles of Organization, operating agreement, EIN confirmation letter, annual report confirmations, business licenses, and any contracts the LLC signs. When a bank, a client, or a court asks for documentation, this folder is the answer. Reconstructing it under pressure is miserable; maintaining it takes minutes.

Beyond the formation documents, keep meeting minutes or written consents for major decisions — even as a single member. A one-paragraph dated note ("On this date, I authorized the LLC to sign the lease at 123 Main St") costs nothing and demonstrates the LLC acts deliberately, not as your alter ego. Keep contracts signed in the LLC's name, not yours personally — the signature block should read "Your Business LLC, by [Your Name], Member." And keep tax records for at least seven years: returns, K-1s if any, and the receipts behind every deduction.

• One folder: formation docs, operating agreement, EIN letter, annual reports, licenses, contracts.
• Dated written notes for major decisions, even as a single owner.
• Sign contracts as the LLC ("Your Business LLC, by Jane Doe, Member") — never just your name.
• Keep tax records at least seven years.