I Have an LLC, Now What? Crucial Steps After Forming an LLC

Once you've set up your LLC, there are some important steps you need to take. Here’s what you need to do next to to set your business up for success.

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after incorporating or forming an llc what are critical next steps

by

Jane Haskins, Esq.

Jane has written hundreds of articles aimed at educating the public about the legal system, especially the legal aspects of starting and running a small business. She has more than 20 years of experience as a practicing attorney, focusing on helping small business owners with startup and contract issues. View her work on LinkedIn.

What to do after you register your business

A small business owner looks over documents in her shop. Learn what your next steps should be after forming an LLC.

1. Get essential documents and compliance filings in order

After forming an LLC, you should prepare an operating agreement and set up a digital folder or physical file to keep track of important business records. Keep in mind that some states require you to publish a notice about your business formation in the local newspaper. Other states require LLCs to file initial reports.

Additionally, starting in 2024, the federal government requires LLCs and corporations to file a Beneficial Ownership Information Report (BOIR). This filing is designed to thwart money laundering and financial crimes. In the report, you'll provide information about everyone who has 25% or more ownership of the company, or who exerts significant control over that company. LegalZoom can assist you with filing the report.

Your Secretary of State's website will be an official source of information about the documents you need to file after forming your LLC. LegalZoom can help with convenient LLC essential documents such as an operating agreement or helpful compliance filing packages that include the Beneficial Ownership Information Report to keep you protected and in good legal standing.

A woman with a tape measure draped around her shoulders sits at a desk and looks over LLC formation documents. Behind her, an employee goes through racks of clothing.

2. Get an Employer Identification Number (EIN)

An Employer Identification Number (EIN)—also known as a Federal Tax ID Number—is used by the Internal Revenue Service (IRS) to identify businesses. Most businesses need an EIN since they're generally required for business banking and to hire employees. However, solo business owners who don't have employees or pay excise taxes—on goods like alcohol, fuel, or tobacco—can use their Social Security number instead. Keep in mind that having a designated EIN can protect against identity theft by limiting the visibility of your personal details, like your SSN. You can apply for an EIN at the IRS website and receive one as soon as you've finished the application. Or, you can also apply for an EIN through an online service like LegalZoom.

A smiling attorney holds a smart phone and sits at a conference table in an office with a new business owner as he consults her about forming a business entity.

3. Open a business bank account

A business bank account will help you to keep your business finances separate from your personal assets. This will make recordkeeping and tax preparation easier. It will also protect your personal finances. To open a business bank account, you'll need your EIN and the certificate of business formation received from the Secretary of State. Business checking accounts are more likely than personal accounts to have monthly fees, so it can pay to compare offerings for the best rate on a business bank account.

It's also a good idea to apply for a business credit card. A business credit card helps your business begin to develop its own credit history without risking a hit to your personal accounts. It's another way of keeping your business finances separate from your personal assets and your business expenses separate from your personal expenses.

As you manage your business finances, consider time-saving tools to help streamline your day. LegalZoom has partnered with service providers like Wix to help build your business.

4. Register your business with your state and obtain a seller's permit if needed

You must register your business with your state's tax agency. Once you do, you'll be able to pay state business taxes, including income tax, employment tax, and sales tax. You might also need a seller's permit or "resale permit." A seller's permit lets you sell items or services in your state and collect sales tax on those items. Most states require that you secure a seller's permit before selling anything.

One benefit to you is that a seller's permit lets you buy goods from wholesalers without paying sales tax. If you have physical locations or sales representatives in more than one state, you might need seller's permits for multiple states. In many states, you can register your business and apply for a seller's permit online. Or, you can contact LegalZoom to learn more about obtaining a seller's permit for your business.

A person welds in his workshop after forming an LLC. You must register your business with your state's tax agency.

5. Obtain local business licenses

Depending on the type of business you're in and where you're located, you may need business licenses from your city or county. You can contact federal, state, and local government offices to find out about any required professional licenses and any local taxes you might have to pay. Or LegalZoom can simplify the process for you with our Business License Report service.

6. Open a merchant account

Whether you're just starting out or looking to scale your business, our partners have solutions and special offers to help you streamline your point of sale.

For example, Square offers mobile payment processing using a dependable system that sends invoices and accepts payments, even through email and texts.

Or, you can use Wix to create a digital storefront for your new business to showcase products and add customer testimonials.

7. Find an accountant to set up your books and get ready for tax time

Don't wait until tax season to find an accountant for your new business. Getting your books in order sooner than later will help you when tax season rolls around, and you can also learn how to set up your company in a way that maximizes tax savings. Both LLCs and corporations may have choices that affect their federal taxes, and an experienced tax expert is able to help you maximize tax benefits. An accountant can also recommend business deductions and ways to save money throughout the year.

LegalZoom has been voted the most trusted partner to help you form and grow your business. With LZ Books and LZ Tax, we've ushered in a new era of tax prep, complete with expert advice and accounting solutions year-round. Get unlimited advice from tax experts who will set your business up for success and keep you updated on tax changes in your state. Find out more about how we can help you make accounting easy and get you ready for tax time.

A woman sits at a desk with a piece of paper in one hand and types on a laptop computer with the other hand.

8. Get insurance for your business

To minimize expensive legal risks, many business owners find it beneficial to find an insurance agent and get appropriate liability protection. For example, you might need to consider options such as general liability insurance.

LegalZoom has partnered with NEXT Insurance, a leading digital "insurtech" (a tech company that specializes in insurance) company, to better help small business owners create and protect their businesses online. Less than 10% of entrepreneurs we surveyed have business insurance upon formation. However, having business insurance is critical, protecting a business and customers from damages.

A woman holding a paintbrush near art supplies and man sit on the floor looking at a laptop computer screen. A large abstract painting hangs behind them.

9. Get legal guidance

It's easy for business owners to make costly legal mistakes. Many of these mistakes are avoidable if you seek advice from a lawyer before signing contracts and hiring employees.

A lawyer can also help you avoid violating employment discrimination and independent contractor laws. Furthermore, a lawyer can advise you on the types of employee-related contracts you need to protect your business and its confidential information.

A lawyer can draft and review contracts to negotiate more favorable terms with your suppliers and advise you on how to protect intellectual property, like logos or product designs.

With LegalZoom, you can benefit from our network of attorneys in all 50 states for year-round support. Get 30-minute calls with attorneys on small business legal topics, such as company setup, hiring, and compliance, for a monthly cost that's less than the price of talking with a traditional attorney for an hour. With an average of over 15 years of experience, the vetted attorneys in our network make LegalZoom the most trusted provider of legal services for small businesses.

A woman turns a sign to "Open" at her shop. Bu using a virtual business address, this small business owner receives and reads digitized copies of postal mail without having to handle it in person or disclose her actual address.

10. Protect your privacy with a virtual address for your business

Do you want to do business in a state where you need a physical address? Consider a virtual business address, which lets you receive and read digitized copies of your postal mail without having to handle it in person or disclose your actual address.

With LegalZoom, you're able to select a virtual business address in any state of your choice. Our addresses are real physical addresses you can use in most states, with the added benefits of privacy, convenience, and prestige. We'll even filter out the junk mail. Learn more about LegalZoom's virtual mail service and how we can help.

Frequently asked questions

A co-owner of an LLC explains to her colleagues what to do after entity formation.

How should I pick a limited liability company (LLC) name?

As an entrepreneur, choosing a good name for your business entity is one of the most important first steps of your business journey. Your LLC name is often the public's first impression of your business. It either captures people's attention or loses it. Not only should an LLC name be catchy and descriptive, but also comply with regulatory guidelines.

As you brainstorm, ask yourself: Is this name memorable? Original? Easy to pronounce? Check to ensure the domain name and social media profile name you'd want are still available.

If you form as an LLC, your business name will need to have "LLC" or "L.L.C." at the end to show customers and partners that it's a limited liability company. Putting a comma before "LLC" is optional, and your logo and trademark don't need to show the "LLC" part. You can't use words like "bank" or "insurance" in your LLC name because including such words often requires approval from specific state agencies to avoid legal issues. Be sure to comply with state regulations to ensure your chosen legal entity name is distinguishable from other businesses in your area. Check with your Secretary of State office for relevant statutes and regulations.

What is an LLC name search?

Searching for the availability of a name for your LLC is key. Your LLC name should be original and available, in order to avoid trademark infringement. Thankfully, LegalZoom offers this LLC name search service for free. Visit our LLC name checker to get started.

Otherwise, you can use your Secretary of State's website to search LLC names and check if the one you want is available. After you type in a business name, the search will likely display information about any business entity with that name, whether it's active or inactive, and who manages it.

Can I use the same LLC name as an unrelated business in a different state?

Yes, you can use the same LLC name as another business in a different state unless that business has a federal trademark on its LLC name.

What's the difference between an LLC and a corporation?

A limited liability company (LLC) is easy to set up and maintain and gives you the most flexibility in how you manage your business. Corporations are typically bigger and have shareholders, which makes them more attractive to investors.

Both LLCs and corporations shield their owners from personal liability for acts of the business and their other owners. As for taxes, members of an LLC pay taxes on their share of the LLC's profits. But you could elect to be taxed as an S corporation if that suits your business needs. (An S corporation is a tax election that could apply to LLCs or C corporations.) Meanwhile, C corporations are taxed twice—first on corporate profits and second as dividend income on the shareholder's personal tax return.

In general, there are fewer formalities with LLCs compared to corporations. However, keep in mind that LLCs can't go public and aren't recognized globally. On the other hand, C corporations must maintain strict corporate formalities (such as board meetings, meeting minutes, etc.) to maintain corporate liability protection.

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