Congratulations on forming your Limited Liability Corporation (LLC)! This is an exciting milestone in your business journey. However, forming your LLC is just the beginning. To ensure your business is set up for success, there are several steps that you need to take. Here’s a comprehensive checklist to guide you through what happens after you form your LLC and what you should do next.
Contents
- 1. Obtain an Employer Identification Number (EIN)
- 2. Open a Business Bank Account
- 3. Create an Operating Agreement
- 4. Register for State Taxes
- 5. Apply for Business Licenses and Permits
- 6. Set Up an Accounting System
- 7. Consider Business Insurance
- 8. Maintain Compliance with Ongoing Requirements
- 9. Create a Business Plan
- 10. Establish Your Brand and Online Presence
- 11. Evaluate Funding Options
- 12. Network and Build Relationships
1. Obtain an Employer Identification Number (EIN)
One of the first things you’ll need to do after forming your LLC is to obtain an Employer Identification Number (EIN) from the IRS. This number is like a Social Security number for your business. An EIN is necessary to open a business bank account, hire employees, and file taxes. You can apply for an EIN online, and it only takes a few minutes!
2. Open a Business Bank Account
Once you have your EIN, the next step is to open a dedicated business bank account. Keeping your business and personal finances separate is essential for managing your business effectively. A business bank account not only helps with organization but also adds to your business’s professionalism. When opening an account, you’ll typically need your EIN, your LLC’s formation documents, and sometimes a resolution from your LLC members authorizing the bank account.
3. Create an Operating Agreement
An operating agreement is a document that outlines how your LLC will be run. It covers things like member responsibilities, voting rights, distribution of profits, and how decisions will be made. While it is not always legally required, especially in single-member LLCs, having one can help prevent misunderstandings among members and provides structure to your business operations.
4. Register for State Taxes
Depending on your state’s requirements and the nature of your business, you might need to register for state taxes. This could include sales tax, if you sell products, or employment taxes if you have or plan to hire employees. Check with your state’s taxation department to ensure you’re complying with all tax obligations.
5. Apply for Business Licenses and Permits
Different types of businesses require different licenses and permits. This often depends on where you’re located and the nature of your business. Common licenses could include health permits for food-related businesses or zoning permits. It’s important to check local regulations to determine what is necessary for your LLC to operate legally.
6. Set Up an Accounting System
Establishing an effective accounting system from the beginning can save you time and headaches down the road. Whether you hire an accountant or use an accounting software, it is crucial to keep track of your income, expenses, and other financial metrics. A good accounting system helps you make informed decisions and ensures you’re prepared for tax season.
7. Consider Business Insurance
Business insurance can protect your LLC from unforeseen events and liabilities. Common insurance types include general liability insurance, professional liability insurance, and workers’ compensation insurance. The right insurance depends on your industry, the size of your business, and any specific risks you may face.
8. Maintain Compliance with Ongoing Requirements
Annual Reports
Many states require LLCs to file annual or biennial reports. These reports provide updated information about your LLC, such as its address and member information. The requirements and fees vary by state, but failing to file can result in penalties or even losing your LLC status.
Taxes
LLCs offer flexibility in how they are taxed. By default, they are treated as pass-through entities, meaning the profits and losses are reported on the owners’ personal tax returns. However, LLCs can also elect to be taxed as a corporation. Decide which option is best for your business and file the necessary tax returns on time.
9. Create a Business Plan
If you haven’t already, now is a good time to create or refine your business plan. A business plan helps you clarify your business goals and map out strategies to achieve them. It can be a valuable tool when seeking financing or partnerships and provides a roadmap for your business’s short and long-term growth.
10. Establish Your Brand and Online Presence
In today’s digital age, having a strong online presence is essential. Consider creating a website and setting up profiles on social media platforms relevant to your audience. Consistent branding across your platforms helps build customer recognition and trust. Developing a marketing plan can also help you attract new customers and drive sales.
11. Evaluate Funding Options
If you need additional capital to grow your business, look into various funding options. These could include small business loans, lines of credit, or investors. Make sure you evaluate the pros and cons of each option to find the best fit for your LLC’s financial needs.
12. Network and Build Relationships
Networking can open up opportunities for your business. Attend industry events, join local business groups, or connect with fellow entrepreneurs online. Building a network can lead to potential partnerships, clients, advice, or even mentorship opportunities that can help your LLC thrive.
With this next steps checklist, you’re well on your way to running a successful LLC. Each point is a crucial piece to the puzzle, ensuring your business is not only compliant but also positioned for success. Remember, the journey of entrepreneurship is ongoing, so keep learning, adapting, and growing!
