Forming a Limited Liability Company (LLC) is an exciting first step, but knowing the right LLC next steps is crucial for building your business successfully.

Once you’ve filed the paperwork and received confirmation of your LLC formation, you may be wondering, “I have an LLC, now what?”

There are several essential LLC next steps to ensure your business operates smoothly and complies with state and federal regulations.

This guide will walk you through everything you need to do after forming your LLC.

Step 1: Complete State-Specific Filing Requirements

After forming your LLC, your state may require additional filings or steps before your business is fully compliant.

These requirements vary from state to state and must be completed to keep your LLC in good standing.

Key State Requirements:

• New York: New York requires that newly formed LLCs publish a notice of their formation in two newspapers, for six consecutive weeks.
• This notice is assigned by the county clerk based on your LLC’s address. Once this is complete, you must file a Certificate of Publication with the Department of State.
• New Jersey: In New Jersey, you must file a Public Records Filing for New Business Entity and a Business Registration form within 60 days of forming your LLC. Both can be submitted simultaneously and are necessary to complete the formation process.

Pro Tip: Completing these next steps for your LLC ensures your LLC stays compliant and avoids penalties.

It’s important to check your state’s specific requirements after formation.

Step 2: Draft an LLC Operating Agreement

One of the most critical documents for any LLC is the Operating Agreement.

While it may not be legally required in all states, having one in place is highly recommended.

The Operating Agreement outlines the structure of your LLC, including management roles, responsibilities, and profit-sharing rules.

What to Include in Your Operating Agreement:

• Management Structure: Define whether the LLC will be managed by its members (the owners) or by appointed managers.
• Decision-Making Processes: Specify how key business decisions will be made, and if a majority vote is required.
• Profit and Loss Distribution: Clarify how profits, losses, and tax responsibilities will be shared among the members.
• Membership Changes: Detail how ownership transfers or the addition of new members will be handled.
• Dissolution: Describe what would happen if the LLC needed to be dissolved, and how assets would be divided.

Pro Tip: Consulting a lawyer to help you draft your Operating Agreement is a good idea. While it’s possible to write it yourself, having a professional review it ensures that everything is legally sound.

Here is an educative video on tips for maintaining your LLC;

Step 3: Fulfill Internal LLC Requirements

Beyond state filings, your LLC should address internal requirements to document its business activities.

These internal tasks may not be required by law, but they’re important for maintaining clear records and protecting your LLC’s liability status.

Internal LLC Next Steps:

• Membership Certificates: Issue certificates to each member of your LLC to document their ownership share. Keep a record of these transactions in a membership ledger.
• Initial Meeting: Hold an initial meeting of members and managers to discuss the structure of the business and approve key decisions.
• Annual Meetings: Plan for regular annual meetings to review business performance and document decisions.

These internal requirements ensure that your LLC operates smoothly and that key decisions are properly documented.

Step 4: Obtain an EIN (Employer Identification Number)

An Employer Identification Number (EIN) is necessary for most LLCs. This number is issued by the IRS and functions like a Social Security number for your business. Even if your LLC doesn’t have employees, getting an EIN is essential for tax purposes and opening business bank accounts.

Why You Need an EIN:

• Tax Filing: An EIN is required for filing federal and state taxes.
• Business Banking: Many banks require an EIN to open a business checking account, which helps separate your business and personal finances.
• Business Credit: An EIN is often needed to establish credit for your business. Building business credit is crucial when dealing with suppliers and applying for loans.

Obtaining an EIN is a simple process. You can apply online through the IRS website, and it’s free of charge.

Step 5: Open a Business Bank Account

Maintaining a clear distinction between your personal and business finances is essential for protecting your LLC’s liability status.

Opening a business bank account and obtaining a business credit card are critical LLC next steps to achieve this separation.

Benefits of a Business Bank Account:

• Liability Protection: Keeping personal and business funds separate helps protect your personal assets from business liabilities.
• Business Credit: A dedicated business account allows you to build business credit, which can be useful when applying for financing or forming vendor relationships.
• Tax Efficiency: A business bank account simplifies tax filing and ensures that all business expenses are documented.

Open your business account as soon as possible, especially if you’re already incurring business expenses or receiving payments.

Step 6: Obtain Required Licenses and Permits

Depending on the type of business you’re running, your LLC may need to obtain various licenses and permits. These can be issued at the federal, state, or local level, and are required to ensure your business operates legally.

Common Business Licenses and Permits:

• General Business License: Most businesses need a license from the city or county where they operate.
• State Tax ID Number: If your state requires a tax ID number, you must register with the state’s tax agency.
• Zoning Permits: If you’re operating a business out of a physical location, you may need zoning permits to comply with local land-use laws.
• Sales Tax License: If your business involves selling products, you’ll likely need a sales tax license to collect and remit sales tax.
• Workers’ Compensation Insurance: If your LLC has employees, you’ll need to obtain workers’ compensation insurance in most states.

Be sure to check both state and local regulations to ensure that you have all the necessary licenses and permits for your business.

Step 7: Maintain LLC Compliance

Maintaining compliance with state and federal regulations is crucial for keeping your LLC in good standing. Failing to meet these requirements can result in penalties or the dissolution of your LLC.

Key Compliance Steps:

• File Annual Reports: Many states require LLCs to file annual or biennial reports that update the state on key business information, such as ownership and management changes.
• Pay Franchise Taxes: Some states, such as California and Texas, require LLCs to pay a franchise tax. This is a fee paid for the privilege of operating as an LLC in that state and is usually based on revenue or a flat fee.
• Submit Beneficial Ownership Information (BOI) Reports: LLCs must report their beneficial ownership information to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN). You’ll need to file an initial report when the LLC is formed and update it if ownership or address details change.

By staying on top of these compliance requirements, you ensure that your LLC remains in good standing with the state and that you continue to enjoy the benefits of limited liability.

Final Thoughts

After forming your LLC, the next steps you take are crucial for its success.

From completing state-specific requirements to drafting an Operating Agreement and maintaining compliance, each task plays a vital role in ensuring your business is structured for growth and legal protection.

Taking these steps seriously will help you avoid potential pitfalls and position your LLC for long-term success.