what can i do with my llc

Last Updated on August 28, 2023

Right here on Collegelearners, you are privy to a litany of relevant information on how to make money with an llc, what can i do with an llc, how to form an llc in california and so much more. Take out time to visit our catalog for more information on similar topics.

what can i do with my llc

9 THINGS TO DO AFTER FORMING AN LLC

Starting a limited liability company (LLC) is a big step for a business, but what you do after forming an LLC is just as important.

You will want to make sure that your new company is properly set up to be financially successful, stay compliant with any laws, and protect your personal assets.

To help with this, we’ve put together this list of nine important things to do after forming an LLC.

It might sound like a long list, but most of the steps are fairly simple, and we’ll provide you with the information and resources you need to get them done.

Steps to Take After Forming an LLC

Starting an LLC is just the beginning. Once your new company is registered and official, there are still things you need to do before you open for business. These include:

1. Create an operating agreement
2. Get an Employer Identification Number (EIN)
3. Open business bank accounts and credit cards
4. Get an accountant
5. Learn more about LLC taxes
6. Research and apply for business licenses and permits
7. Get insurance
8. Establish your web presence
9. Publish a press release

Doing these things after forming your LLC will help ensure that you comply with any relevant local, state, and federal regulations, keep your liability protection intact, maintain accurate financial records, and attract customers to your business.

1. Create an Operating Agreement

An operating agreement is a legal document that outlines the ownership and member duties of an LLC.

A handful of states (California, Delaware, Maine, Missouri, Nebraska, and New York) legally require LLCs to have an operating agreement, but it is optional in most states. However, even if it is not a requirement in your state, we recommend having one for a few reasons.

First, an operating agreement can help prevent or resolve disputes between LLC owners by laying out specifics of how to handle various situations your business will or might face. And, if your business is a single-member LLC, an operating agreement can bring the company credibility and ensure courts uphold its limited liability status. In many states, if you don’t have an operating agreement, your LLC might be subject to default regulations concerning certain business operations.

• Operating agreements usually have at least six main sections:
• Organization
• Management and Voting
• Capital Contributions
• Distributions
• Membership Changes
• Dissolution

You are free to add any additional sections you like that apply to your business. You can use our free LLC operating agreement tool to create the document in an easy-to-use question-and-answer format. Or, you can download our free operating agreement template if you prefer. If you’d rather not write it yourself, you can also hire an attorney to assist you.

2. Get an EIN

An EIN is like a Social Security number (SSN) for your LLC. It is also sometimes called a Federal Employer Identification Number (FEIN) or Federal Tax Identification Number (FTIN).

If any of the following apply to your business, you are required to have an EIN:

• Your LLC has employees
• Your LLC is a multi-member LLC
• Your LLC files excise taxes
• Your LLC withholds taxes for nonwage income paid to a nonresident alien

But even if you own a single-member LLC with no employees, getting an EIN is a good idea. Most banks require that your LLC have one to open a business bank account, which is a critical part of maintaining your limited liability protection.

3. Open a Business Bank Account and Credit Card

One of the biggest advantages of an LLC is the personal liability protection they provide. Limited liability protection means that the personal assets of the owner are not in danger if the business is sued or goes into debt.

However, this protection — sometimes called the corporate veil — is not absolute, and it can be lost under certain circumstances. The easiest way to lose personal liability protection is to mix your personal financial accounts with the business. This includes things like buying business supplies, accepting payments, and paying bills with your own personal checking account or credit card.
For this reason, it is essential that you open a business bank account and get a business credit card before you start operating.

4. Get an Accountant

Many small business owners think they can do their own accounting and are looking to avoid paying for a professional service. However, hiring an accountant can save you money, stress, and potentially legal troubles in the long run.

Here are some of the advantages of hiring an accountant for an LLC:

• Prevents the business from overpaying on taxes and helps it avoid penalties, fines, and other costly tax errors
• Makes bookkeeping and payroll easier, leaving you with more time to focus on your growing business
• Manages your business funding more effectively, discovering areas of unforeseen loss or extra profit

If you want to keep track of your LLC’s finances yourself, check out our guide to the best accounting software.

Find out how much you could be saving today by scheduling a consultation with a business accountant.

5. Learn More About LLC Taxes

Owning an LLC comes with the responsibility of paying taxes. But before you start paying, you need to choose your LLC’s tax status and register with the necessary government offices.

Choose Your LLC’s Tax Status

One of the advantages of an LLC is that owners have flexibility in how the company is taxed.

An LLC is classified by default as either a disregarded entity or a partnership based on the number of owners (members). A single-member LLC is automatically treated as a disregarded entity by the IRS, and a multi-member LLC is considered a partnership.

However, an LLC also has the option to be taxed as an S corporation (S corp) or as a C corporation (C corp).

The best tax structure depends largely on how much profit the business makes and what the owner’s financial plans and goals for the company are.

Our How to Choose Your LLC Tax Status guide details the pros and cons of the different options and can help you figure out the best option for your LLC.

Register for Taxes

Tax requirements vary by state and by an LLC’s tax status. It is a good idea to consult with your state’s tax office to determine which taxes you need to register for and pay.

The following are some common types of state taxes an LLC might have to pay:

• Franchise tax
• Sales tax
• Employment tax
• Withholding tax
• Unemployment insurance tax

Depending on an LLC’s tax status, it may or may not have to pay corporate federal taxes. Either way, you do not have to register ahead of time (aside from potentially getting an EIN) for federal taxes. That being said, whether your LLC is taxed as a C corp that pays federal income tax or as a pass-through entity where only the owner pays personal income tax, you should be aware of how to file your LLC taxes and understand the differences between each tax status.

6. Research and Apply for Business Licenses and Permits

Getting the right LLC business licenses and permits is one of the most important things to do after forming an LLC.

This can sometimes be an intimidating step, as the business license and permit requirements vary considerably from state to state and even between counties and cities. Different types of businesses may also have different licensing requirements.

There are three main licensing jurisdictions: federal, state, and local.

Federal Business Licensing

Not all businesses need a federal license. Only certain industries are subject to federal regulation. These include:

• Agriculture
• Alcoholic beverage
• Aviation
• Firearms, ammunition, and explosives
• Fish and wildlife
• Commercial fisheries
• Maritime transportation
• Mining and drilling
• Nuclear energy
• Radio and television broadcasting
• Transportation and logistics.

State Business Licensing

State business licenses and permits vary state-by-state, but the most common one is the seller’s permit, which allows businesses to sell products and/or services in the state. Some states may refer to this as a “sales tax permit” or a “vendor license.”

In addition to the seller’s permit, there are a number of different types of state business licenses and permits, including:

• General business licenses
• “Doing business as” (DBA) licenses
• Zoning and construction permits
• Health permits
• Food service licenses
• Liquor licenses
• Medical licenses
• Electrical permits
• Fundraising licenses
• Farming licenses
• Real estate licenses

To help you figure out which business licenses you need in your state and how to get them.

Local Business Licenses

Some cities and counties require certain businesses (or sometimes all businesses) to have local business licenses or permits. If you have physical locations in more than one city or county, you may be required to have different licenses for each location.

Some of the common types of local business licenses include:

• General business licenses
• Zoning and construction permits
• Health permits
• Seller’s permits
• Professional licenses

Our state business license guides also provide additional information on local business licenses your LLC may need.

7. Get Business Insurance

Every LLC should have some type (or types) of business insurance.

At a minimum, your LLC should probably have general liability insurance, which is a broad insurance policy that protects your business from lawsuits. Other insurance policies an LLC may need depend on the type of business, if you have employees or not, and other factors.

In addition to general liability insurance, common types of business insurance include:

• Workers’ compensation insurance
• Professional liability insurance
• Commercial property insurance
• Commercial auto insurance
• Business owner’s policy

There are many other types of business insurance policies, and some are designed specifically for certain types of businesses.

Before you decide on which business insurance to get for your LLC.

8. Establish your web presence

All businesses should have an internet presence. This includes having:

• A website
• Social media accounts
• A YouTube channel

Create a Website

The style of your website could vary greatly depending on the type of business you have as well as your own personal preferences. However, there are a few sections that most business websites should have:

• Home page
• About page
• Contact page
• Privacy policy page
• Terms and conditions page

But, you have a lot of flexibility about how to present the information on your website. The important thing is for potential customers to be able to find you on the web.

If you don’t feel comfortable making your own website, there are a lot of tools and website builders that can help you create your own business website.

Website builder tools like the GoDaddy Website Builder have made creating a basic website extremely simple. You don’t need to hire a web developer or designer to create a website that you can be proud of.

Create Social Media Accounts YouTube Presence

In addition to a website, you’ll want to consider creating business profile pages on popular social media sites like Facebook, LinkedIn, Twitter, and Instagram.

Depending on your business, Twitter and Instagram may or may not be a good fit, but having a presence on Facebook and LinkedIn can help many potential customers (and maybe even potential employees) find your business.

Create a YouTube Presence

A YouTube channel for your business can be used to:

• Improve your SEO by boosting your Google ranking and conversion rate.
• Drive social media engagement and create stronger bonds with your customers.
• Provide detailed explanations about products and services.

Recommended: You’ll want to make sure that your website, social media accounts, and YouTube channel clearly display your company logo.

If you need help creating a logo for your business, check out our free logo generator.

9. Publish a Press Release

One easy and inexpensive way to promote your new business is by issuing a press release. A press release is an official statement by a business that is given to the press for public knowledge. Press releases are typically short and to the point.

Issuing a press release has a number of potential benefits, including:

• Helping to brand your business.
• Increasing foot traffic to your business.
• Increasing your website’s search engine optimization (SEO) and enhancing your business’s online presence.

What Happens After Forming an LLC?

Creating your limited liability company is just the start. You’re legally poised to open for business, but there are several steps you need to take before the business is official.

First, obtain the necessary permits and business licenses. You will need to obtain these separately and check for any permit requirements. Depending on what type of business you own and its location, you may need to secure a license through the county, town, or state. Forming an LLC alone isn’t the same as getting a business license. Examples of permits and licenses include:

• Zoning permits
• Professional licenses
• Health department permits
• General business operation licenses
• Home occupation permits

Fortunately, many of these licenses are inexpensive and easy to obtain. Getting one upfront will ensure your business operates legally and avoids any fines. Just be sure to research your local requirements carefully.

Many states also require a seller’s permit, which is required for LLCs, sole proprietorships, partnerships, and corporations that sell taxable services and goods. For instance, a seller’s permit is required in California for any business that leases or sells property subject to the state’s sales tax. You must get the necessary seller’s permit before selling anything to the public.

Next, obtain an Employer Identification Number from the Internal Revenue Service. Also known as a federal tax ID number, an EIN serves as a way of identifying your business to the IRS for tax purposes and for tracking its transactions. Think of it as a Social Security number for your LLC. You don’t necessarily need an EIN, unless you hire employees, but it’s still good practice to obtain one because you can give the number to vendors and clients without providing your Social Security number.

If applicable, apply for S corporation status. An LLC is a pass-through tax entity by default, which means that the company’s profits and losses are passed through to the members and then reported on their tax returns. In some cases, electing S corporation status may benefit the business because you can split profits into distributions and salaries. You’ll still pay self-employment tax on the salaries, but not on any distributions.

File Form 2553 with the IRS to elect S corporation status within 75 days of forming your LLC or from the start of the existing tax year.

Finally, open your business bank account and apply for a business credit card. You can open the account under your LLC name, which means you can accept checks payable to your company. Since LLCs and corporations are obligated to separate their personal and business finances, it also makes sense to have a business-related credit card. When you put all your company expenses on the credit card, you have an automatic paper trail that makes it easy to review end-of-the-year expenses.

After forming your LLC, it’s time to insure the business to keep it protected from losses. Consider getting a business owners policy (BOP) or general liability insurance.

Activities to Avoid With an LLC

While you can achieve great things with an LLC, there are also activities that can get you into trouble with the law. For example, if you transfer your personal assets to the LLC in an attempt to protect them, you’ve fraudulently conveyed those assets. Fraudulently conveyed assets include those that are:

• Transferred or sold under fair-market value
• Transferred in an attempt to keep creditors from seizing them

You cannot form an LLC as a means of avoiding a creditor. Fraudulent conveyance is considered a civil offense and will cost you a lot of money in legal fees. You also can’t form an LLC with the intent to avoid paying taxes or reduce your tax burden. Tax avoidance is legal and acceptable, which includes transferring money to a Roth IRA to defer taxes, but avoiding them altogether is considered a crime that could result in jail time.

If going into business with a partner, make sure you know the person and go into the relationship with your eyes open. You both want to stay on the same legal page.

After Forming an LLC FAQs

What is the next step after forming LLC?

There are nine next steps after forming an LLC: create an operating agreement, get an EIN, register for taxes, get an accountant, apply for business licenses and permits, open a business bank account, get insurance, establish your web presence, and publish a press release.

How do you know when your LLC is approved?

The state government office with which you register your LLC will inform you when it is approved.

How long does it take for my LLC to be approved?

Approval time for an LLC varies depending on the state and whether you register online or by mail. In many states, an LLC is approved immediately after registering and paying online.

What happens when you get an LLC?

When you get an LLC, you have limited liability protection for your personal assets as long as you don’t pierce the LLC’s corporate veil.

Does my LLC need a federal tax ID?

An LLC needs a federal tax ID (called an EIN) if it is a multi-member LLC or if it has employees. Additionally, most banks require businesses to have an EIN to open a business banking account, so we recommend that all LLCs get one.

Does an LLC pay quarterly taxes?

LLCs do not pay quarterly taxes, but owners of LLCs (who are considered self-employed) are supposed to pay estimated quarterly personal income tax payments.

What are the benefits of becoming an LLC?

Some benefits of becoming an LLC include personal asset protection, tax flexibility, and management flexibility.

Should I get an EIN or LLC first?

You should form an LLC before getting an EIN.

Do I need business insurance if I have an LLC?

Yes, all LLCs should have business insurance. At a minimum, you should get general liability insurance, but there are other types you may want to get as well, depending on the type of business you have.

Do I need a business license if I have an LLC?

You might need a business license if you have an LLC, depending on the type of business and location.

Check out our state business license guides to see what licenses you might need for your LLC in your state.