After Forming Your LLC

Forming an LLC is just one step. Many other items need to be completed after you formed your LLC including the articles of organization, the operating agreement, the selection of a registered agent. Though completing all of the required tasks can seem overwhelming following the steps below will help put you and your LLC on the right path.

Though your LLC is officially formed, you want to make sure you have the proper state and federal permits and licenses to conduct business. Depending on the nature of your business, these might include a seller’s permit, zoning permits, a permit for conducting business out of your home, or industry-specific permits for businesses involved in food and alcohol sales, agriculture, radio and telecommunications permits, or other industries, depending on state and local laws.

Another crucial step for new LLC owners is obtaining an employer identification number (“EIN”). Also called a Federal Tax ID, an EIN is your business’s social security number. You can apply for one online or by mail.  Acquiring an EIN is a crucial step for managing your business’s finances; most banks and credit unions require an LLC to have an EIN before a business bank account can be opened in the LLC’s name. A bank account for the LLC is recommended for keeping business expenses separate from personal expenses, tracking finances, and preparing taxes. You can also get a business credit card which will help your business form its own line of credit. With a business bank account, you can easily delegate financial tasks to employees and maintain professionalism with customers.

You also will need to register with your state tax agency to pay income, employment, and sales taxes. Tax requirements vary from state to state – some even require a “franchise” tax, which taxes the business for operating in that particular state. Check the information available on your state’s Department of Revenue, Department of Treasury or Department of Taxation to clarify requirements applicable to your business.  

The standard LLC is considered a “disregarded” or “pass-through entity,” meaning that it is not subject to corporate income tax but the income “passes through” to the owners. The good news is that LLCs are not required to pay separate federal corporate taxes. If your LLC has more than one owner and is taxed as a partnership, the LLC will need to file a partnership tax return.  The LLC will not pay federal taxes based on that return.  Instead, LLC members report their earnings on personal taxes. Once again, however, you’ll need to double-check that this is the case for your business before tax season, as exceptions to this rule exist for certain LLCs, and nothing pertaining to taxes is ever without nuance.

Finally, you want to understand how your business can stay compliant. What requirements do you need to follow when hiring employees? What reporting requirements does your state enforce? When will quarterly taxes be due?

Getting an LLC organized and operating is no simple feat. But with the right preparation, new LLC owners can effectively manage all the moving parts. For assistance planning your business’s next steps, contact Jeff Roper today.