Filing your business formation paperwork with the state is a big first step in getting your new business up and running. But that’s just the beginning.
After you have officially incorporated your business or formed an LLC (Limited Liability Company), you need to tackle a variety of tasks to make sure your company is legally compliant.
What should you be thinking about after you’ve formed your business entity? Here’s a list to guide you:
Most states make it mandatory for LLCs and corporations to have a registered agent (also known as “agent for service of process”). A registered agent is a party that will receive legal notices, tax documents, and other notices and documentation from the state on your behalf.
To be recognized as a legitimate registered agent, the party must have a physical address within the state in which your business is registered; it must also maintain office hours from 8 a.m. to 5 p.m. on weekdays. Depending on your state’s requirements, you might be able to serve as your own registered agent, but only consider this if you are available to receive documents all day on every business day.
As a corporation or LLC, you must maintain certain documentation to stay in good standing with the state. Many states require that corporations have bylaws, and although not a requirement in all states, an LLC should have an operating agreement. Bylaws and operating agreements define the internal governing rules of a company.
Bylaws, for example, lay out meeting procedures; describe roles and responsibilities of directors, officers, and employees; identify how company stock should be issued; and other details. An LLC’s operating agreement serves to establish the LLC’s management structure, member’s roles and responsibilities, the decision-making process, profit distribution, and other operational considerations.
Known also as a Federal Tax ID number, an EIN serves to identify your business (similar to a Social Security number for an individual). You can obtain one from the IRS (they’re free by the way). If you have employees or are a corporation or a multimember LLC, you must obtain an EIN. You’ll use your EIN on tax forms and other business paperwork Often, banks will require an EIN before they’ll open a business bank account for your company.
To keep your business finances separate from your personal funds, open a business bank account. This is a must so you avoid commingling funds and jeopardizing your status as an LLC or corporation. Find out in advance what your bank will require in the way of formation-related paperwork and proof of identity. Generally, you will need to show your articles of incorporation or articles of organization, your EIN, and your bylaws or operating agreement.
Your business, depending on the goods and services it provides and where it’s located, may need business licenses and permits to operate legally. To make sure you know which licenses and permits apply to you, contact your Secretary of State, county, and municipality offices.
Although the act of forming an LLC or incorporating automatically offers some protection of your business name, I encourage you to consider trademarking your name.