Congratulations on forming your LLC, you’ve taken a huge step to growing your business. But now what? Here’s what you need to keep your business in good standing and get started off on the right foot.
Starting a business is exciting, but there are some considerations and legal requirements that new business owners need to navigate. You’ve completed a major step, but there are some other parts of maintaining your business that you should be aware of now that you’ve finished forming your LLC.
1. Get an EIN if you don’t already have one
A business federal tax ID or EIN works like a Social Security Number for your business. Also known as a “Tax ID number,” an EIN allows you to file tax returns for your business. EINs are unique, nine-digit numbers issued by the Internal Revenue Service (IRS) and are primarily used for employment taxes.
It is often required to open a bank account, which helps you properly pay and account for your business expenses. An EIN also helps your business build credit and maintains your business as a legal entity.
2. Make a plan to keep your LLC compliant
Now that you’ve formed your LLC, unfortunately the legal work isn’t entirely over. Meeting your annual compliance requirements is essential.
Most states require you to file an annual report for your LLC. An annual report provides basic information about your business such as the names and addresses of your registered agents, directors, admin, and managers.
If you don't file annual reports and pay associated fees on time, you may accumulate fines and penalties, and your business may be suspended or even dissolved. Find out when your annual reports are due, and put reminders on your calendar so you don't miss the deadlines. Missing these dates can turn into a pretty big issue for your business. The upside is, some states only require the report every two years.
A business bank account allows you to separate your business finances from your personal finances, which comes with many benefits. As an LLC owner, you risk losing your limited liability protections if you don’t keep your accounts separate, so once you get your EIN, make sure to sign up for a business bank account.
Once you get a business bank account, you are opening up many benefits as a small business owner:
- Easier to track your business finances away from your personal spend
- Make filing your business taxes much smoother
- Business-specific discounts and rewards
- Get customer purchase protection
- Protect your limited liability
- Make your bookkeeping easier
- Get more credit options and establish your credit
- Add professionalism and credibility to your business
4. Establish business credit
With your business bank account, you will also be able to apply for business credit such as credit cards, loans, and lines of credit. Building business credit is the lifeline for a business. It enables you to get the money you need to expand, cover your daily expenses, purchase inventory as needed, make hires, and have a safety net for hard times.
A strong business credit score can also help you get trade credit and secure better repayment terms with your vendors and suppliers.
Building business credit also helps protect your personal credit score. As a rule of thumb, you should avoid using personal credit for business expenses and purchases.
5. Learn more about your required business taxes
Owning a small business and forming your LLC also brings the responsibility of paying taxes. Business tax requirements depend on your state and vary according to your LLC’s tax status. Consult with your state’s tax office to determine which taxes you need to register for and pay to avoid penalties and fines.
Some state-specific taxes include:
- Franchise tax
- Sales tax
- Employment tax
- Withholding tax
- Unemployment insurance tax
6. Obtain local business licenses
Your LLC officially registers your business entity with the state, but that does not mean you officially get your license to operate. Many business owners mistakenly think that their LLC agreement works as a business license, but that is not the case. Without a business license, you do not have the legal right to operate.
The business license you require depends on the type of business you operate, and it also depends on where you are. You may need your license from the town, country, or state within which you operate.
Some examples include:
- Zoning permit
- Liquor license
- A general business license
- Health permits
- Home occupation permits
- Commercial sign permit
- Seller’s permit
- DBA (Doing Business As)
These are typically not expensive and quite simple to obtain, just make sure you’re getting the permits and licenses you need to run your business within legal boundaries. It will also help establish credibility and trust as a business. Speak with your local board of equalization offices to find out which permits your business needs to legally operate.
7. Insure your business
It’s within every LLC’s best interest to get some type of business insurance to protect their business. You should at least have general liability insurance for your business to safeguard against legal issues and lawsuits.
Depending on your business and your day-to-day activities, other types of business insurance may be a worthy investment for your LLC, including:
- Worker’s compensation insurance
- Professional liability insurance
- Fire or damage insurance for your business property
- Commercial property insurance
- Theft insurance
- Commercial auto insurance
Business insurance requires its own policies separate from your personal insurance, and these policies are designed specifically for small business operations. Make sure you are protecting your business assets from any risk or liability. It’s a small cost for a potentially big saving.
8. Build or optimize your website
Your website is often the face of your business and the first touchpoint you have with your customers. A professional business website will help give you credibility, help customers find your products or services, and establish your product’s brand against your competitors.
Your website can help push a bigger return on investment. The more your clients know about your services, or customers know about your products, the more likely they are to reach out to your brand when they’re in need of that type of product or service.
Some tips to build or optimize your website are:
- Be clear about your product or services, including pricing
- Make your website easy to navigate, with clean design
- Showcase your good reviews or customer testimonials
- Make sure your contact information is clear and easy to find
- Use colors that stand out but aren’t hard to read
- Sell your products directly through your website for a smooth customer experience
Luckily, a website is not too expensive to build and maintain. You can use modern website builders to do it yourself, or resource out to a professional to build it for you. Either way, getting a simple website up and running is essential for your business.
Once you’ve formed your LLC, there are some other key steps you need to keep on top of in order for your business to grow and thrive. That includes getting an EIN and a business bank account, all of the licenses and insurance you need to protect your business, and following a few best practices for new businesses.
With Nearside, we’ll help you navigate all of this complicated stuff when forming your LLC and beyond. Need help? Talk to one of our experts about keeping your business compliant.