What to do after forming an LLC
If you have recently filed for an LLC, you have already taken the first step towards protecting your assets. You still have more to do because forming an LLC does not mean that you can now open your doors for business. Here are some things that you need to do before you start doing business:
Obtain Permits and Licenses
Forming an LLC is not the same as obtaining a business license. You do not want to be fined for doing business without a license. An LLC is the foundation of your business but you still need a license to operate. Depending on the kind of business that you run, you might need to obtain licenses from your town, state, or county.
Examples of permits that you need are general business operating license, zoning permit, health department permit, and home occupation permit. Most of these permits are inexpensive and obtaining them upfront will help you to save money. If you live in Delaware, you should visit pages such as Delaware LLC to find out where to get permits.
Get an EIN (Employer ID Number)
You need an Employer identification Number so the IRS can be able to track your business transactions. Just think of an EIN like a social security number for your business. This number is essential, especially if you are planning to hire employees.
Obtaining an EIN is good practice even if you do not plan to hire employees: you can give it to vendors and clients instead of handing out your personal social security number.
Open a Business Bank Account
Once you establish an LLC, you can now open a bank account for your business. Doing so will allow you to accept checks that are written to your business name. Moreover, the owners of LLCs and corporations are required by law to keep their personal and business accounts separate. This means that you have to open a bank account for your business.
Insure Your Business
Although an LLC will protect your personal assets from business liabilities, it will not protect the business from losses. For this reason, you should consider getting a Business Owners Policy or General Liability Insurance for your company. These policies will cover your LLC against injuries, accidents, and claims of negligence.
Moreover, if you are selling a product, you will need product liability insurance. If your LLC provides professional services, you need to get professional liability insurance.
Apply for a Credit Card
Aside from opening a bank account for your LLC, you also need to open a credit card account for your business. When you put all your business expenses on your card, you will have an audit trail for your business expenses when tax time comes around.
Additionally, having a credit card for your business will allow you to maintain a corporate veil that guards your personal assets.
Get a DBA (Doing Business As)
You need a Doing Business As to operate under any variation of your company name. For each of the name variations, you need to file a DBA.
Keep Your LLC Compliant
As soon as you become an LLC, you have to start operating your business at a higher admin level. For instance, you will need to file an annual report with your state and pay your quarterly tax. You should mark these important dates on your calendar so that you do not forget them.
Once you form an LLC, you will not have to stress about losing your personal assets. However, this is not the only benefit of LLCs – you will also have less paperwork, flexible profit distributions, and ownership flexibility.