Some business owners assume that they do not have to take any additional actions after forming their LLC. In many cases, creating your LLC is just the first step to ensure your business complies with the various laws and regulations that affect it. Below are some matters that you likely still need to address, even after forming your LLC.
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1. Get additional licenses and permits.
If your company operates in a sector that requires a license, that license needs to be in the name of the LLC. That means that you often cannot apply for any licenses or permits before you create your LLC. However, you also need these licenses and permits to operate your company.
The most common licenses and permits involve food and alcohol distribution. However, a wide variety of industries require local licenses. General business operations licenses, zoning permits, and other health department permits are all good examples.
2. Get your seller’s permit.
Many states require that your company have a “seller’s permit” or something similar before you can operate as a business. It is sometimes called a sales tax license as well. You must have this type of permit before you start selling; it is required to collect and remit sales tax.
Many states that require a seller’s permit use a simple application process and want a nominal fee to complete the registration.
3. Get an Employer Identification Number (EIN).
An EIN is also known as a federal tax ID number. This number will be used to file taxes and provide tax documents to employees. If you plan on employing even just one person, obtaining an EIN is mandatory.
If you do not have employees, it is not required, but it may still be a good idea to get an EIN. You can use an EIN to provide to clients and vendors for their tax purposes rather than giving out your individual social security number or tax identification number.
4. Open a bank account for your LLC.
You may have already opened a bank account for your business. If that is the case, you should change the name on the account to reflect the name of your LLC.
Keeping a separate bank account for your LLC is critical to continue the asset protection benefits that this type of business entity offers.
5. Create your operating agreement.
Your LLC’s operating agreement sets out how the LLC functions, both on a daily basis and with respect to more long-term issues. It can cover matters as important as what will happen when a member wants to leave the company to simpler things, such as who has authority to sign checks on behalf of the LLC.
Having an LLC operating agreement is not required in every state, but it is still good to have one. Setting out rules and expectations at the development of the LLC can avoid a lot of conflicts and headaches down the road.
You may also want to consider creating an operating agreement even if you are the only owner of the LLC. A single-member LLC operating agreement touches on many of the same issues as other types of operating agreements. Investors and financial institutions may require that you have this document before they provide funds to your company.
6. Get insurance.
It is a good idea, in most industries, to get some general liability, commercial insurance coverage. Accidents happen regardless of how careful you may be. Having adequate insurance will address many types of accidents and protect your company’s assets if something terrible happens.
If you have employees, you are often required to get workers’ compensation insurance and unemployment insurance. Check your state’s rules and regulations regarding this type of coverage.
7. Appoint a registered agent.
Your business is often required to have a “registered agent” in each state where you do business. A registered agent is someone who will accept legal documents and information on behalf of the LLC.
In many cases, you can be the registered agent. However, there are certain requirements that a registered agent must meet in some states. For example, some states require that the registered agent be available to accept service “during regular business hours.” If you only want to work Mondays and Tuesdays, you may not be available enough to be a registered agent. In those situations, you can hire a registered agent through a service or ask a bank or law firm to be your registered agent. Rocket Lawyer has Registered Agents in all 50 states to give you timely, convenient, and confidential services.
8. Create a plan to keep up with LLC requirements.
Most states require that you file an annual or bi-annual document to maintain your LLC status. Be sure you know and understand the requirements in each state where you do business. Then, create a plan to remind yourself to file these important documents before they are due.
If you have questions specific to your business and the laws in your state, reach out to a Rocket Lawyer On Call® attorney for affordable legal advice.
This article contains general legal information and does not contain legal advice. Rocket Lawyer is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.