What to Do AFTER You Form an LLC - 6 Steps You Must Take

Summary

In this informative video, Jim Hart from Hawthorne Law discusses essential steps for new LLC owners to ensure proper management and legal protection for their business. He emphasizes the importance of drafting an operating agreement, obtaining an EIN, and opening a dedicated bank account. Hart also highlights the need for necessary business licenses, appropriate contracts with clients and vendors, and the use of a payroll provider. By following these steps, entrepreneurs can safeguard their personal assets and ensure compliance, allowing them to focus on growing their businesses.

Takeaways

• 😀 Ensure you have an operating agreement in place to protect your LLC from legal issues.
• 📝 Apply for an Employer Identification Number (EIN) for tax purposes before opening a bank account.
• 🏦 Open a separate bank account for your LLC to maintain clear financial boundaries.
• 📜 Obtain the necessary business licenses and permits required by your local government.
• 🤝 Update contracts with clients and vendors to reflect your LLC's name for legal clarity.
• 💼 Set up a payroll provider if you plan to hire employees for proper compensation management.
• 🔍 Consider multiple bank accounts for different business purposes to organize finances better.
• 📈 Starting as a sole proprietorship is fine, but switch to an LLC when your business grows.
• ⚖️ Consult legal services if you need help with compliance and documentation.
• 🛠️ Check out additional resources, like common mistakes when forming an LLC, for further guidance.

Q & A

What should I do first after forming an LLC?

The first step is to draft an operating agreement, which outlines the management structure and operating procedures of your LLC.

Why is an operating agreement important?

An operating agreement is vital because it demonstrates that you are following proper legal procedures, helping to protect your business and personal assets in case of a lawsuit.

What is an EIN, and why do I need one?

An EIN (Employer Identification Number) is a tax ID number required for opening a business bank account and for tax purposes. You must apply for it after forming your LLC.

How should I manage my business finances after forming an LLC?

You should open a separate bank account for your LLC and transfer all business funds from your personal or sole proprietorship accounts to maintain clear financial separation.

Do I need to reapply for business licenses after forming an LLC?

Yes, you may need to apply or reapply for the appropriate business licenses and permits specific to your LLC in your state or municipality.

What should I do with existing contracts after forming an LLC?

You need to update existing contracts to reflect your LLC's name instead of your personal name and ensure they are signed properly to protect your LLC.

What type of payroll provider should I consider?

It is important to select a reliable payroll provider to manage your payroll processes effectively, ensuring compliance with tax laws and proper employee compensation.

How can I get a checklist for forming an LLC?

You can find a checklist for forming an LLC by checking the description link in the video or the resources provided by the attorney.

What common mistakes should I avoid when forming my LLC?

Common mistakes include not having an operating agreement, mixing personal and business finances, and failing to properly manage contracts. A video on this topic is available for further insights.

What are the benefits of working with a legal service when forming an LLC?

Using a legal service can help ensure that all necessary documents, like the operating agreement and EIN application, are correctly prepared and filed, saving you time and potential legal issues.