What Happens After Registering a Company?
< View All PostsThe first step in starting any business is formally forming that business. For many forms of businesses, such as a limited liability company (LLC) or the various forms of corporations, this occurs via registration. So, you have taken that first step and registered that business, what comes next?
I Just Formed an LLC, Now What?
Here are the steps you will need to take to get your new business off to a strong start.
1. Governing Documents
LLCs are legally required to have what is called an operating agreement. Your first step after forming an LLC should be to prepare this operating agreement.
An operating agreement is a legal document that governs the LLC. The operating agreement establishes ownership and member duties of the LLC. Requirements regarding operating agreements differ from state to state. However, operating agreements should at least identify the LLC’s members and establish the desired distribution of profits (and losses).
Operating agreements are not set in stone, they can be amended. However, amending an operating agreement typically requires at least approval from a majority of members, though the operating agreement itself can establish different procedures for amendments.
In addition to establishing an operating agreement, you should also gather all important business records pertaining to your newly formed LLC. Form a file or binder to store these records and a hard copy of the operating agreement.
Additionally, many states require new LLCs to publish notice of formation and/or file initial reports. The website of the secretary of state for the state where you LLC was formed is a good resource for finding these requirements.
2. Employer Identification Number
Most businesses need an employer identification number (EIN), which the Internal Revenue Service (IRS) uses to identify your business. However, solo business owners who do not have employees may use their personal Social Security Number instead.
You can apply for an EIN for free on the IRS’s website. This is a quick and easy process, and you will receive your EIN as soon as the application process is complete. However, if you prefer you can also apply by mail or fax.
3. Visit an Accountant
While on the topic of taxes, it is a good idea to visit an account once forming your LLC. Businesses, just like individuals, must pay taxes. However, businesses are subject to different taxes than those many of us are accustomed to paying on our individual returns.
Visiting an accountant can help keep you informed of the taxes your business is likely to incur and can also set you on the right path in areas such as bookkeeping to ensure an easy and successful tax season for your new business.
4. Open a Business Bank Account
It is important for any business to keep accurate records. Keeping personal and business finances separate will make this task easier on business owners. Thus, one of the first things any business owner should do upon forming their business is open a separate bank account solely for business purposes.
Additionally, you may want to consider opening a credit card in the business’s name. This will allow the business to start to build its own credit history.
5. Open a Merchant Account
In our current society, the majority of sales are paid for with a credit or debit card. Thus, you should prepare your new business to be able to accept these payment methods. A merchant account is a special bank account that holds funds from credit and debit card purchases until the transaction is approved. Upon approval, the funds are then transferred to your regular business bank account.
You will need to apply for a merchant account and there are likely going to be costs and fees associated with the account. If you are operating a smaller business, it may make more sense to initially accept payment through a third-party payment service, such as PayPal or Square. These payment services will charge transaction fees but do not charge monthly fees. This will be more financially beneficial, until your business has grown to a point where the fees associated with a merchant account make more sense.
6. Follow State and Local Specific
Every state has different requirements that must be met before a business can open its doors and start operating. In every state, you will need to register with your state’s tax agency, so that you can pay any applicable state taxes on the business.
Additionally, many states will require some form of a seller’s permit, also known as a resale permit. Most states require a seller’s permit before your business can start making sale, thus, making this one of the most important steps to take before your new business can begin operations. Further, if your business is located in or has representatives in multiple states you may need to obtain a seller’s permit in each state you operate in.
A seller’s permit allows you to sell goods or services in the applicable state and collect tax on those sales. It will also allow you to purchase goods you need to operate your business from wholesalers without paying sales tax.
In addition to state-specific requirements, your city or county may also require you to obtain business licenses. These requirements are often contingent on the type of business and where its located. To learn more about these local requirements and any potential local taxes you should contact your local government.
7. Protect your Business
In getting a new business up and running you will likely conduct tasks such as hire employees, enter into contracts, creating a logo, etc. Consulting an attorney can help protect your new LLC from expensive lawsuits related to these tasks before they occur. An attorney will advise in before entering into employment contracts, contracts with other merchants, etc. to ensure your business gets a fair deal and does not enter into any disadvantageous contracts without realizing.
Additionally, an attorney can help ensure your new logo doesn’t violate any trademark laws and help protect any intellectual property your business owns. These are just a few examples of how an attorney can be beneficial to the health of your new small business.
Additionally, you should insure your business. Insurance will protect your business against any unexpected liabilities that it may incur throughout the life of the business.
8. Make/Update a Plan for Your Business
By this point, you probably already have a business model for your new LLC. However, as this article exemplifies there are a lot of moving parts to operating an LLC that you likely didn’t think of when forming the idea and concept for your business.
Making or updating a plan will not only ensure your business is set to make sales and grow but will also keep your business up and running. To do this your plan should include how you are going to keep your LLC compliant.
Many licenses and require renewals and business bank accounts often have fees that must be paid to remain operable. Thus, you should know how you are going to keep up with all the behind the scenes “maintenance” that your LLC will require.
Once you have taken these crucial steps your LLC should be ready to be up and running and start doing business!
If you have any questions, Eco-fyle can help. Contact us today!
