Many people dream of forming a company. After weighing all the pros and cons, you may have decided to go for a limited liability company (LLC). It has many advantages that suit your needs. Creating your LLC is not enough to legally operate as a business. It is only the first step. You should have a clear understanding of the LLC paperwork and steps that you should take to ensure that there will be no legal problems that will come up in the future.
Dealing with the Legal Requirements of LLC Paperwork
The first thing you should do is to take care of all the LLC paperwork. These are the documents that you need to complete and file to create your LLC. But you may have to file other types of paperwork to make sure your operations will be legal. As an owner, it is your responsibility to comply with all the requirements that the law has set.
· Business Permits and Licenses
Creating an LLC does not automatically give you a business license. Because of this misunderstanding, many business owners have to pay fines for operating without a business license. Keep in mind that LLC paperwork will give your business legal foundation. Meanwhile, the business license will give you the right to operate.
Regulations on permits can be different depending on the state. Business licenses will also depend on the type of business. You have to familiarize yourself with local regulations.
You may think that getting permits and licenses are only additional expenses. That is not true. These are not expensive. Besides, you may end up having to pay more if the government finds that you are operating without a license.
To avoid overlooking any LLC paperwork, you can hire a professional services company that has experience in forming a business. This company may have more knowledge and experience when it comes to different laws and regulations.
· Seller’s Permit
Many states require business owners to have a seller’s permits. Usually, it is for LLCs, sole proprietors, partnerships, and corporations selling taxable goods or offering taxable services. Research about your state’s laws to be sure.
· Employer Identification Number
The Employer Identification Number (EIN) is also known as the federal tax ID number. The Internal Revenue Service (IRS) uses it to identify businesses and track their transactions.
Companies that have employees should have an EIN. Otherwise, it may not be a requirement. But, it may still be advantageous for you to have one. You can use it to assure clients or vendors instead of giving your social security number.
Taking Care of Finances
After establishing an LLC, you should open a bank account solely for your business. It should be under your LLC. This way, you can accept checks that are under your business name. It is also a way for you, as an owner, to ensure a clear distinction between your business and personal finances.
You should also think about having a credit card for your business. You can put all the company expenses on that card. Not only will you ensure the proper allocation of funds, but you can also audit your finances easily. Having a central source for your business expenses will also protect your assets.
Getting Insurance
Choosing to operate as an LLC provides protection of your personal assets from the liabilities of your company. But, it does not protect your business from possible losses. An insurance policy is an investment you will not regret.
Consider general liability insurance or business owners’ policy (BOP). If you are selling products, it is also advisable to get product liability insurance. If you are operating a business that offers professional services, you may also need professional liability insurance.
Doing Business As (DBA)
Companies that operate using variations of their official names should file a DBA after registration of the LLC. Usually, owners can do this through the local government. As the owner, you should file DBAs for your LLC so you will not have problems with your operations.
Compliance with Requirements
LLCs have different requirements than sole proprietors. Most states, if not all, require LLCs to file annual reports and pay taxes. Make sure you remember all deadlines to avoid getting penalties.
Sometimes, one gets too focused on management responsibilities and forgets about filing deadlines. You can avoid this situation by marking the dates on your calendar, setting up alarms, or signing up for a service that sends alerts before the deadlines.