10 Things You Must do After Forming an LLC

After your LLC formation, the following 10 steps are crucial to ensure that your business complies with relevant local, state, and federal regulations and thrives smoothly.

If you have filed your Limited Liability Company (LLC) with the state or are planning to do so, then congratulations. You have taken the most important step towards protecting your business from liabilities by setting up the legal foundations of your business. But is that all you need to form an LLC?

Well, that is just the tip of the iceberg; there is a long road to go. You can DIY or hire top-ranked LLC services that offer these services as part of their LLC formation packages.

These steps are critically important to keep your business liability protection intact, attract customers to your business, maintain accurate financial records, and more.So Let’s discuss them all.

1. Create an Operating Agreement

An operating agreement is a legal document that outlines how your LLC will operate. It includes the ownership and roles of LLC members. It also gives an insight into the LLC management structure and what will happen if a member leaves the LLC. An operating agreement generally has at least six main sections;

  • Organization details
  • Management structure and voting
  • Asset distributions
  • Capital contributions
  • Membership changes
  • Dissolution

You can add any additional sections that apply specifically to your business. If you prefer not to write it yourself, you can also hire an attorney to draft one for you. However, we recommend you acquire professional LLC formation services such as ZenBusiness, or Northwest Registered Agent that offer these services as a standalone or part of their LLC filing packages.

Only a few states, such as California, New York, Delaware, Missouri, Maine, Nebraska, etc., legally require LLCs to adopt an operating agreement. However, most states encourage LLCs to have one; otherwise, your LLC might be subjected to default regulations concerning certain business operations.

Though it is not absolutely mandatory to have an operating agreement in your state, our experts recommend you adopt this for many reasons. For instance, an operating agreement prevents and resolves disputes among LLC owners by laying out a specific set of rules to handle various situations that a company might face. 

Moreover, there is no room for confusion as capital contributions, distributions, roles, and responsibilities are clearly mentioned in the operating agreement. In the case of a single-member LLC, an operating agreement brings your business credibility and ensures courts uphold its limited liability status. 

2. Choose Tax Model for Your LLC

Besides providing liability protection, an LLC offers flexibility in how your company is taxed.

By default, single-member LLC is considered as a disregarded entity like a sole proprietorship or as a partnership if an LLC has multiple members. However, an LLC can also choose to be taxed as an S corp or C corp.

Now, which tax structure is suitable for your LLC? Well, this depends primarily on your financial plans, how much profit your business expects, and the goals for your company, etc.

Our How to Choose Your LLC Tax Structure guide covering every aspect of LLC taxes will help you determine the best option for your LLC.

3. Register for Taxes

To stay compliant with the federal and state governments, tax registration is the most important step you need to make sure of after forming your LLC. Tax requirements vary by LLC’s tax status and by the state of your business operation. 

The following are some common types of state taxes that your LLC might have to pay;

  • Employment tax
  • Sales tax
  • Franchise tax
  • Unemployment insurance tax
  • Withholding tax

It is a great idea to consult with your state’s tax office and your accountant to determine which taxes you need to register for and pay. However, top-rated LLC services such as ZenBusiness, BetterLegal, etc., offer a free session with a CPA to assist you in this process.

4. Get an Employer Identification Number (EIN)

An EIN is like a Social Security number (SSN) for your LLC that the IRS uses for tax purposes. It is also known as a Federal Tax Identification Number (FTIN) or Federal Employer Identification Number (FEIN). 

You must get an EIN if your LLC;

  • Has more than one members
  • Has employees
  • Withholds taxes for non wage income paid to a nonresident alien
  • Files excise taxes

If you own a single-member LLC without employees, still getting an EIN is favorable for you. For example, most banks require LLCs to have an EIN to open a business bank account. Maintaining your company’s limited liability protection, a business bank account is crucial. The EIN also builds trust with vendors.

5. Apply for Business Licenses and Permits

Business licenses and permits are critically important to save your business from lawsuits and protect an LLC’s legal standing. Different types of businesses or areas of business operation such as counties, cities, and states have considerably different requirements for business licenses and permits. Below are stated the three main licensing jurisdictions; 

Federal Business Licensing

Every business does not require a federal business license. Only specific industries stated below are subject to federal regulation;

  • Alcoholic beverage
  • Agriculture
  • Firearms, ammunition, and explosives
  • Aviation
  • Commercial fisheries
  • Fish and wildlife
  • Mining and drilling
  • Radio and television broadcasting
  • Maritime transportation
  • Nuclear energy
  • Transportation and logistics.

State Business Licensing

Seller’s permit is the most common state permit which allows businesses to sell products and/or services in a specific state. The following are a few state business licenses and permits that may apply to your LLC;

  • Doing business as (DBA) licenses
  • General business licenses
  • Foodservice licenses
  • Health permits
  • Medical licenses
  • Electrical permits
  • Farming licenses
  • Zoning and construction permits
  • Real estate licenses
  • Liquor licenses
  • Fundraising licenses
  • Pesticides licenses

To figure out which business licenses you need, you can subscribe to standalone services of the most reliable LLC formation services such as IncFile, ZenBusiness, IncAuthority, etc.

Local Business Licenses

Many cities and counties require specific businesses to acquire local business licenses or permits. Some of the common types of local business licenses include:

  • General business licenses
  • Professional licenses
  • Health permits
  • Zoning and construction permits
  • Seller’s permits

If your business operates in more than one location, you may need to get the local license from all locations. Visit your county’s clerk office to get information related to licenses or permits for your business.

6. Account Management

The whole purpose of creating an LLC is to protect your personal assets from business liabilities. Hence, it is important to separate your business and personal account by proper account management. 

You can do the accounting on your own or hire an accountant. Many software helps you manage your accounts more effectively. Professional accountants, however, help you save money, avoid stress, and protect you from potential legal troubles in the long run. Hiring an accountant has the following additional advantages;

  • Easier bookkeeping and payroll
  • Protect your company from overpaying on taxes 
  • Help your company avoid fines, penalties, and other costly tax errors
  • Manage your business funding more effectively by discovering areas of extra profit or unforeseen loss 

7. Open a Business Bank Account 

Mixing your personal financial accounts with the business can lead your LLC to lose its corporate veil or personal liability protection. Such practices include accepting payments, buying business supplies, and paying bills with your own credit card or personal checking account.

Therefore, you must open a business bank account and get a business credit card before you start operating. Our 6 best LLC formation services help you get a business account easily by providing you a banking resolution as a part of their LLC filing services. 

8. Get Your Business Insured

Your LLC should at least have general liability insurance that protects your business from lawsuits. Depending on the type of your business, you may need additional insurance. A few common types of business insurance are;

  • Business owner’s policy
  • Workers’ compensation insurance
  • Professional liability insurance
  • Commercial auto insurance
  • Commercial property insurance

9. Devise a Clever Marketing Strategy

Without effective marketing, it is almost impossible to beat your competitors. Issuing a press release is one of the easy and inexpensive ways to promote your new business. 

As part of your marketing strategy, you can give discounts, introduce exciting offers, advertise your business through multiple means, get reviews, etc. A few potential benefits of effective marketing include:

  • Increase foot traffic to your business
  • Help in your business branding
  • Increase your website’s search engine optimization (SEO) 
  • Enhancing your business’s online presence

10. Ensure Your Web Presence

In this digital world, where everything is one click away, you can not deny the power of the internet. Your online presence will give you an upper hand over your competitors. Moreover, in the current pandemic situation, where the majority of the businesses shifted online, it will help you get more business. Here is what you need to do;

Create a Website

A website tells your customers who you are, what you do, what your customers say about your product or services etc. In short, your website is the representation of your business in the online world. A typical website includes the following sections;

  • A Home page
  • An About page
  • A Privacy policy page
  • A Contact page
  • A Terms and conditions page

You can present more information on your website by creating blogs and informative articles. Make sure you get a good SEO score so that potential customers easily find you on the web.

Create Social Media Accounts YouTube Channel

These days, social media is a powerful tool to generate opinions, advertise your business, and grab many customers. Create business profile pages on popular social media sites like Facebook, Linked In, Instagram, and Twitter.

Here you can do influencer marketing by having shout-outs for your business on social media celebrities’ pages who have their audience in thousands and millions of followers. Having a youtube channel will also add up to your online presence. 

Conclusion

Getting the Articles of Organization approved by the state means your LLC is legally registered. However, to maintain the legal status and to stay compliant with the federal and local agencies, you need to follow the steps mentioned above. These 10 steps after forming an LLC not only secure your business and save you from unforeseen circumstances but also help your business thrive and make you worry-free.

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