Great, you have an LLC and now you have all that is required to get to work and operate your business!
Hold up! We wish it was that easy, right?
You see, everyone talks about getting an LLC but not many people talk about what to do after you start an LLC. And this is kind of scary if you don’t know what to do.
So in this post, we’re going to tell you what to do after you start an LLC.
This post will cover the next steps on your entrepreneurial journey that will keep your LLC compliant with federal and state laws, safe from liability, and you more knowledgeable and confident.
Let’s jump right into it!
What to Do After You Start an LLC
1. Create an Operating Agreement
The first thing we want you to do if you haven’t already is to create an operating agreement.
An operating agreement is a legal document that outlines the rights, rules, and obligations for the internal operations of your LLC.
It is there to lay ground rules and procedures for how the business owners and the managers of the business will handle decisions.
This includes how ownership is divided, how profits will be split, how often you will meet, what happens if a member wants to leave the LLC or passes away, and much more.
Note that most states don’t require you to have one but we highly recommend that you create one, regardless if it is required or not, to minimize misunderstanding and disputes.
If you do not have an LLC operating agreement, the default LLC rules of your State will apply which may differ from what you want for your business.
And there isn’t a one-size-fits-all type of LLC operating agreement, but most will contain six important sections:
- Management and Voting,
- Capital Contributions,
- Membership Changes, and
We would shy away from using a cookie-cutter template for your operating agreement as it is binding by law, and you may not agree with what you find online.
Instead, here’s a post we’ve published that literally walks you through how to set up your own LLC operating agreement to fit your preferences, and the best part is that it’s absolutely free.
Be sure to check it out.
2. Get an EIN
An EIN is a 9-digit number used to identify your LLC. You can think of an EIN number like your LLC’s social security number.
And the same way you need your social security number to do certain things personally, you need your EIN number to perform necessary business activities.
- Most banks require an LLC’s EIN number to open a business bank account, get a business credit card, or get a business loan.
- Additionally, if you plan to have employees you will need an EIN number to file your payroll taxes.
- But the biggest reason you need an EIN is to file your business taxes.
You can choose not to have a business bank account, you can choose to not have employees, but we wouldn’t even dare you to choose not to pay your business taxes.
Our Uncle Sam doesn’t play.
You can obtain an EIN number for free by visiting irs.gov/node/17090. This will redirect you to the IRS site specifically for EIN numbers. Once there, click on “Apply for an EIN online.”
If you apply online, you will get an EIN number immediately.
3. Open a Business Bank Account
Using your personal bank account as your business bank account can have some legal consequences.
Instead, open a business bank account.
By doing so, you reap a few major benefits:
- You protect your personal assets.
- You separate business and personal finances.
- You can simplify taxes.
- You can enter a partnership.
- You can sell your business.
- You satisfy a prerequisite for building business credit.
In general, there are three types of business bank accounts:
- Checking account
- Savings account
- Merchant account
When deciding between business bank accounts, pay attention to the following things:
- Sign up bonuses
- Transaction limits
- Excess transaction fees
- Transfer limits
- Wire limits
- Daily balance requirements
- Online and mobile banking
- ATM access
- Nearby branches
Depending on your needs, some of those items will be a priority, and you want to make sure you are getting the best deal.
If you want to know the best business checking accounts there are right now, be sure to read this post next.
4. Start Building Business Credit
Business credit is a company’s ability to buy something today and pay for it at a later date.
By building business credit you enjoy the following benefits as an LLC:
- Higher limits on business lines of credit and loans which provides increased purchasing power
- Utilization freedom which provides more leverage
- No effect on personal credit which protects your personal credit
- Better approval chances, terms, and prices mean cheaper financing in the short-term and long term that leaves more money in your business
To start building business credit for your LLC, do the following:
Step 1: Incorporate your LLC.
Step 2: Get an EIN which was the 2nd point in this video on what to do after you start an LLC.
Step 3: Open a business bank which was the 3rd point in this post.
Step 4: Get a business phone number.
Step 5: Register with Dun & Bradstreet to get a D-U-N-S number.
Dun & Bradstreet is one of the three top business credit bureaus. To get a D-U-N-S number, do the following:
- Got to Dun & Bradstreet’s website at dnb.com
- Click on “D-U-N-S number” in the menu
- Then click “Get a D-U-N-S Number”
Step 5: Establish Tradelines with Vendors/Suppliers Who Report
Popular options with a net of 30 payments include:
- ULINE, and
You could also apply for a business credit card.
We made an entire post on the best business credit cards that you can check out to cut down on your research time.
For the best business credit, be sure to pay your vendors and credit issuers early.
Business credit is calculated based on your companies payment history, negative marks, and business information such as time in business.
6. Register With Your State and Obtain a Sales Permit
In most states, you will need to register to pay state-specific business taxes, including income taxes, employment taxes, and sales taxes.
This is typically done online via your state’s specific tax portal.
Also, you may need to obtain a seller’s permit if you have an online business or have a service that needs to collect sales tax as well.
7. Budget for Taxes
Where there is revenue, there are taxes to be paid.
We can’t tell you how many business owners we’ve worked with who were shocked at the end of the year when it was time to pay federal and state income taxes.
They completely forgot to budget for them.
We suggest building taxes into your business budget. Even better, account for them in the margins of your products or services so taxes are always accounted for.
At the very least, be aware that they exist and the respective deadlines so you avoid paying late penalties.
Depending on your business and the state you do business in, the taxes you are responsible for will differ, but here are the six most common taxes:
- Income Taxes
- Self-Employment Taxes
- Estimated Taxes
- Payroll Taxes
- Excise Tax
- Sales Tax
Keep them in mind as you grow your business.
Well, there you have it. We hope we answered your question on what to do after you start an LLC.
And if you need any help with your business taxes, be it an LLC or other business entity, we’ll be glad to help you.
Work with our accounting and tax services today to save more on your taxes!