Under what circumstances do you need a business license?
<p>Specifically, what does it mean to be "operating a business"?</p>

<p>I started an LLC in Delaware, but write software to power my company from my home and while I travel across the country. Do I need to get a business license in my home state and locality? Do I also need it in any state I travel to where I work on my company?</p>

<p>We have no storefront, but are about to begin a nation wide mail order operation. Do I need a license in each state a customer could order from? </p>

<p>There's a strong argument the LLC won't need to obtain a business license in each state you are making sales into. And these days, you don't need a physical location and may still be required to obtain a business license. </p>

<p>However, there are several variables at play which are state-dependent; such as what your home state is, what state you're incorporated in (which we already know), and <strong>what states you are selling into</strong>. </p>

<p>For example: If you were incorporated in Delaware, your home state is New York, and selling $250k of software into Illinois; the LLC may need to obtain a business license in each of these states. </p>

<p>A general rule of thumb would be to obtain a license in:</p>

<ul>
<li>State of Incorporation</li>
<li>State of Domicile</li>
<li>State where the LLC has any employees</li>
<li>State where the LLC makes substantial sales into (e.g., over $250 or $500k per year)</li>
</ul>

<p>The question really is one of "nexus," and most states define it differently. If you reach nexus in a state that requires you to pay income tax in such a state, then you may be required to obtain a license. Some examples of states with a rather low nexus threshold that requires licensure is Nevada and New Mexico. </p>

<p><strong>Note</strong>: You'll likely be responsible for collecting/remitting sales tax as well as paying income tax on income you've earned in several states. </p>

<p>If you're personally a resident of Dalaware, then you're all good.</p>

<p>Otherwise, if you're personally a resident of another state, and some other resident in such state decides to sue your company after dealing with you as its agent, then you might not enjoy the LLC protections of your company and face personal responsibility in any such lawsuit, unless you register your company with your home state of residence as a foreign corporation.  (Which is one of the reasons why incorporating in Delaware should not be advised for everyone.)</p>

<p>If you do a nationwide mail order operation, then, depending on your state, you might be required to collect the sales tax for orders shipped within the states where you have a nexus in (as Delaware has no sales tax, this would mean that you'd only have to collect the sales tax in your home state).</p>

united-states