Does My Entity Need a Business License?

What you need to know about businesses that require a license.

In this episode of Coffee with Carl, attorney Carl Zoellner looks at how and where to use a business license.

So every state, county, and city is a little different in their business license requirements.

Let’s say I was in the business of selling coffee mugs, or trinkets, or some sort of item that customers came into a store for, then in all likelihood, you would need a business license.

Does My Business Entity Require A Business License? 

If you’ve got a rental property, and that rental property is an LLC, generally, that rental property will not require a business license. It is worth considering because you do not want to violate any local statutes. 

Typically for a rental property, there would be no need for a business license. Also, when it comes to real estate, staying in the lane of real estate investing here for a moment, when it comes to entities like flip entities and things like that, those generally won’t require a business license either. 

However, the entity in your entity portfolio that may require a business license would be an entity with your corporate taxation or a corporation. That’s where you would start to look. Now lots of other questions come up in regards to this. What if I have an entity structure set up for stock trading?  

Generally, those are going to be exempt. There are many local exemptions for businesses that do not have a brick-and-mortar location or businesses that don’t actually have customers coming to a physical place. 

Imagine if you owned an online Amazon store; you probably wouldn’t need a local business license for that. You’ll be paying lots of different types of taxes, but it’s one of those things that a business license tends to come with a physical location. This isn’t a 100% rule. It’s not always the rule, but more of a general rule of thumb. For most of you who are real estate investors, if you’ve got rental properties, generally, there’s no business license. 

Now, If you’re a property manager, you may have a business license. There are websites online that offer a feature to check for business license requirements in your state. Fundera has a website where you can look up what the local requirements are for the different types of business you’re conducting and what you’ll require there. 

The Takeaway

Just remember to look at both state and local, even city level, because each may have some specific requirement. Usually, when it comes to small businesses, there are exemptions. So make sure to look for those exemptions. 

As always, keep taking advantage of our free educational opportunities and the free content that we put out on the web. So that’s Toby’s Tax Tuesday, our tax and AP events for our clients who’ve already gone through our Tax and Asset Protection event. 

Our Structure Implementation Series is fantastic. That answers a lot of the questions you have in the beginning. So a lot of different educational opportunities out there. One of my favorites as well is our Infinity Investing Workshop. 

Resources mentioned in this video:

• Join our next Tax & Asset Protection event to learn more advanced tax minimization & entity structuring strategies
• Subscribe to our YouTube channel to make sure you never miss the latest strategies & updates

Got an idea for a future Coffee with Carl? Send it to Carl at cwc@andersonadvisors.com.