If you’re someone who has recently formed an LLC or a Limited Liability Company, you have actually taken a vital step towards setting the key foundation of the business and safeguarding your assets. You might have faced too many questions which took you to decide about forming an LLC but you would probably have to know more about what you would do after forming an LLC.
Do you think that by creating an LLC you can legitimately open your doors for a business? Well, not really! There are few vital facts that you need to know about forming an LLC. Let’s take a quick look at them.
- Obtain necessary business permits and licenses
There are many new business owners who have the notion that forming an LLC is similar to obtaining a license for business. Sadly enough, they realize later on that this is not the case when they are penalized and charged money for running a business without license. Instead of this, you have to think of it in the other way, obtaining an LLC is the foremost step towards setting a legal foundation for your business. A business license just gives you the authority to operate. Most business licenses are cheap enough and when you get one upfront, this can save your dollars and also help you maintain a legal business.
- Get an EIN (Employer Identification Number)
An EIN is also deemed to be a federal tax ID number which is a method for the IRS to recognize your business and monitor on its transactions. EIN is similar to a social security number for companies. In case you plan on keeping employees, having an EIN is compulsory but you can even get an EIN without having employees. This is because you can share the EIN with your vendors and clients instead of your Social Security number.
- Grab a seller’ permit
There are many states which need a seller’s permit and this permit is needed for LLCs, sole proprietors, corporations and partnerships which sell taxable services and goods. For example, if you reside in California and you wish to form a limited liability company, you should be aware that you will certainly have to get a seller’s permit. You have to get this permit way before you start selling or leasing property.
- Start a business bank account
Once you establish an LLC, you have to open a business bank account under the Limited Liability Company. This will let you accept checks which are written to your business. Moreover, owners of LLCs and corporations are all obligated to separate their personal and business finances and hence having a dedicated business account in a reputed bank is a must.
- Insure your LLC
Though it is true that forming an LLC actually safeguards your personal and commercial assets from any company liability yet it doesn’t guarantee you to protect the business against any form of losses. This is why you still need to get general liability insurance or a Business Owners Policy. Such policies have coverage which covers your business against any kind of injuries, accidents and other negligence claims. In case you’re selling some product, you would need product liability insurance.
- Apply for a business credit card
Besides opening a separate bank account, using a credit card for business is also a lucrative idea. By making all business expenses by swiping on the business card, you will have an instant audit idea of the entire year’s expenses whenever it’s time to pay your taxes. Moreover, when you have a credit card which is specific for your business, this will help you maintain your ideal corporate nature as it safeguards your personal assets.
- File a Doing Business As (DBA)
Are you going to operate your business under the variation of any company name? If yes, you would require filing a Doing Business As (DBA) for each kind of variation. So that your business can operate underneath the LLC, you have to let your LLC file the DBA.
Once your become an LLC or a corporation, you have to run your business in a much higher administrative level as compared to what you used to do while you were a sole proprietor. Be adept enough and have the minimum skills that are required to operate a business in the right way.