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You gathered the facts, you conducted your research, and then decided to take the step to form a Limited Liability Company (LLC). Congratulations, this is one of many important decisions that you will make as a business owner.
But now what? What’s next?
Now that you have received the confirmation back from the state of your choice, there are additional steps that you have to take before opening up shop and getting ready to start. This means that you have to ensure that your LLC is compliant and operational. This includes obtaining and/or preparing additional documents that will be required to start business and begin receiving revenue.
Operating Agreement – The first post step to forming an LLC should be to obtain an Operating Agreement. This document is essentially the governing document of the LLC. It will list the names of the members and/or managers and their percentage of ownership. In most cases, you should list those individuals who will be responsible for any tax matters. This includes any individual who will be applying for the Employer Identification Number (EIN) for the business. So, where and how do you obtain an Operating Agreement? As part of the process of using a professional company or law firm to form the LLC, they can prepare the Operating Agreement for you for an additional fee.
Additional Publishing Requirements – There are a few states that have additional publishing requirements when it comes to forming an LLC. For example, you must file a notice in a newspaper or other type of publication announcing that the LLC has been formed. The Secretary of State’s office in the state of filing will inform you if this is a requirement.
Employer Identification Number (EIN) – An EIN is a number that is issued by the Internal Revenue Service and is used to identify your business. In most cases, the bank will ask for the EIN for the business when applying for a business account. In addition, an EIN is used when doing business with vendors and for applying for business credit.
Business License – Applying for a business license is an easy step. However, this can be a question of, “What comes first, the chicken or the egg?” There have been many instances when entrepreneurs have decided to apply for a business license prior to forming the LLC. It makes sense, however to form the LLC first. In this case, you want to ensure that the name of your business is available at the state level, and that the legal structure of your business is in place. So a critical step is to create the foundation of your business, and then obtain the rights to operate the business through your local government agency.
Open a Business Bank Account – Another crucial step for business owners is to open a business bank account in the name of the LLC. This is important for a few reasons. Performing this task will allow to begin to conduct business and accept payments from clients. Having your business bank account separates your personal banking from that of your business banking. This is key to staying compliant and keeping that shield of protection around your personal assets.
Now that you have taken the important step to ensure both name and liability protection it is important that you take the time to plan for a successful business. This includes following the steps that we have outlined here.
Let us know your thoughts. Have you taken the post LLC steps outlined?