A limited liability company (LLC) is a type of business entity that's easier to set up and maintain than a corporation. Forming an LLC gives you the most flexibility in how you manage your business while shielding you from personal liability for acts of the business.
But what do you do after forming an LLC? Here is a step-by-step guide for after you register your business—whether you have an LLC or a corporation—to get off to a strong start. Plus, learn how to stay compliant, avoiding preventable and costly legal issues as you grow.
What to do after you register your business
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 tofile 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 anoperating agreementor helpfulcompliance filing packagesthat include the Beneficial Ownership Information Report to keep you protected and in good legal standing.
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 alsoapply for an EINthrough an online service like LegalZoom.
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 haspartnered with service providerslike 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 aseller's permit for your business.
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 ourBusiness 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 offersto 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. WithLZ BooksandLZ 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.
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 withNEXT 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.
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.
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 aboutLegalZoom's virtual mail serviceand how we can help.
Frequently asked questions
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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