If you’ve just formed a company (or ordered a formation from us), congrats! You’ve just taken the first step of a very important, miles-long journey, that is establishing a business.
If you haven’t formed a company yet, and still doing research, then you are to be commended because it’s important to know and understand all the issues around forming (and establishing and maintaining) a company.
The first thing you need to understand, that forming a company (whether a Corporation or LLC — we’re going to assume LLC for the rest of this article, but the issues are the same) is really the first (and easy part). There are many, many other activities you need to think about and do, and that aren’t covered by an organization such as ours, when we form the company for you.
Establishing Your Business:
- Finalizing your “formation documents.” Just because someone gave you an Operating Agreement as part of your “LLC Formation” doesn’t mean it’s good, or accurate, or applies to your circumstances. Read it carefully, and revise it as appropriate. I cannot tell you how many bad partnership breakups I’ve seen — bankrupting folks — which could have easily been avoided with a better Operating Agreement.
- Obtaining a FEIN (after your LLC is established).
- Changing the tax status of your LLC, if that is what you want. For example, if you have only one owner your LLC will (typically) default with the IRS to a “disregarded entity.” If you have more than one owner, it will (typically) default to a “partnership.” If you want to have a different tax status, such as a S-Corp tax treatment (IRS Form 2553) or C-Corp tax treatment (IRS Form 8832), you will need to file those forms. DON’T WAIT!
- Did you file for a LLC in a state not where you’re conducting business? If so, you’ll need to foreign file that LLC in the state (or states) your conducting business. Learn more: Register a Foreign LLC or File a Foreign Corporation.
- Obtaining a bank account.
- Obtaining a local business license.
- Obtaining a permit / license to operate (depending on the business, i.e. if your a construction company, some states require a construction license) — THIS IS NOT THE SAME THING AS A BUSINESS LICENSE, and don’t think you’re okay to do whatever it is you do, just because you have a local city business license (pay special attention when you’re opening up new business in a new state).
- Obtaining a tax certificate, or number, or whatever, as appropriate for your jurisdiction to collect and pay sales / use taxes.
- Obtaining insurance. General Liability (or “GL”) at a minimum, but talk to a good business insurance agent. You may need other policies or riders, depending on what you do.
- Creating an appropriate “chart of accounts,” to keep track of revenues, taxes, expenses and more. Talk to a good bookkeeper or accountant, who can help you with this.
- Creating a good template contract for your business / clients. You should have a contract in place for EACH THIRD-PARTY you work with.
- Make sure you have an “Independent Contractor Agreement” in place for any web developers, marketing folks, app developers, etc, that grant you either a license or assign full intellectual property rights to you. The specific language you want to see is a “WORK MADE FOR HIRE”. Otherwise, the contractor will actually own the copyright of anything they produce for you, even if you pay for it.
There are many more steps, if you think about it, depending on your business (i.e. getting a place to rent, utilities, workmans’ comp, creating a website, etc, etc), but the above are must-haves for just about all businesses.
Contact us if you have questions. We are here to serve you.