Congratulations! If you’re here, that means you’ve taken your first steps as a business owner and formed your LLC. To get to this point, you must have a registered agent, filed Articles of Organization, prepared an operating agreement (good on you for doing this), and applied for your EIN. However, you’ve only done half of it. You’re probably thinking what? I know! Don’t worry though we’ve simplified it. Here is what you need to do AFTER forming your LLC.
Maintain Your Annual Reports
An important step to staying compliant is to maintain your annual reports. In these reports, you’ll generally need to supply your LLC’s physical address and your registered agent’s name and address. Basically, if your address or registered agent changes make sure you update your annual report!
WARNING! Failure to do so may result in you facing fees, penalties, and you may risk closure and loss of good standing.
Now that you know that, let’s have a refresher on the two elements a bit more to help you stay compliant.
LLC Physical Address
Your LLC’s physical address cannot be a PO box. You probably found this out as you assigned your business address during registration. So, don’t make the common mistake of getting this first. If you do not have a designated physical address or are tired of using your home address (most don’t like exposing their privacy and want a different/separate business address), there are various commercial business address options that you can choose from, the list is below.
- Private Mailbox Stores: A private mailbox is often located in a retail center or plaza, that provide mailboxes linked to that store. You’ll get a real street address, but it’s not ideal if you truly want a professional business image.
- Virtual Offices/Business Centers: Virtual offices are a popular option. It gives you a professional image and a permanent street address. You’ll get the benefits of a traditional office without buying or renting an office.
- Commercial Offices: A commercial office is your typical office space that you can establish as your place of work. It’s best for you if you need a place for employers to work in every day and clients to meet.
- Virtual Mailbox Services: A virtual mailbox is the most flexible and affordable option for your LLC. If you want a professional business image and don’t really need the physical space this is for you. You’ll get a permanent business address and you can travel and work from anywhere.
If we got your wheels turning and you want to change your business address, you can check out the 5 Ways To Get a Business Address For Your Startup.
Great! Now, you have your physical address figured out. Don’t tune out just yet, though. Next, it’s time to decide how you want to set up your registered agent.
Registered Agent’s Name and Address
All LLCs are required to have a registered agent in the state where the company is established to receive legal documents during business hours. The translation here, normal business hours are typically Monday through Friday from 8:00 AM to 5:00 PM.
Another requirement is the registered agent must have a physical address at which the business can receive the service of process (i.e. legal documentation, tax documents, corporate filing documents, and notices of litigation). In summary, no PO Box, it’s not accepted as a physical street address. Are you seeing a trend here with PO Boxes? Avoid them with your LLC!
Now, who can you assign to be your registered agent? You have the option of being your own registered agent, having a friend or family member act as your company’s registered agent, or hiring a registered agent service. It’s highly recommended you use a registered agent service if you are uncomfortable with legal matters or you don’t want to handle all that legal paperwork. Not sure who to select for your registered agent or looking to change your registered agent? See the pros and cons of each registered agent option here.
Obtain Necessary Licenses and Permits
Depending on the nature of your business, you will be required to get certain licenses and permits that allow you to legally operate your business. For example, if you open a restaurant, you’ll probably need a food license. Additionally, this will come in handy for getting a fire department permit, air and water control permits, a sign permit, and health permits depending on your industry.
Federal Licenses and Permits
If your business operates in areas regulated by a federal agency, you’ll need a federal permit or license. For example, if your business imports any agricultural products (animal products, plants, etc.) or you need to broadcast information via radio, television, cable, or satellite, you will need federal licenses to do so. Check with your federal agency if your business requires this and how to apply.
State Licenses and Permits
The required business licenses depend on where you are and what your business does, and the fees vary. Usually, states regulate more activities than the federal government. If you find yourself in the business of construction, dry cleaning, farming, plumbing, restaurants, retail, auctions, or even vending machines, it is best that you check out the necessary state licenses that you’ll need to obtain.
Local Licenses and Permits
The local licenses and permits depend on where you are based and your business type. Businesses that are run from home usually need permission to perform these activities in a residential zone.
Get Documents for Hiring Your First Employee
You may not be thinking about hiring employees right now. However, you may reach a point where you will need to hire some helping hands to assist in the growth of your business. In order to do this, you will need to obtain documentation to allow you to hire employees.
When it comes to filing taxes, you'll also want to make sure your paperwork is in order. Here's a list of the taxes you'll need to shell out and the related documents you'll need to file as an employer, according to the Internal Revenue Service (IRS) :
- A W4 form to withhold the proper amount of federal income tax from a full- or part-time employee's pay, once a year to your state and federal governments
- A W2 form to the Social Security Administration and a share of a full- or part-time employee's Social Security payroll taxes (FICA) once a year to your state and federal governments
- An I-9 Employment Eligibility Verification form for every new hire
- Taxes on 1099 workers (independent contractors) either quarterly or once a year to the federal government
The same forms must also be submitted to your state's department of labor or taxation.
Proof of worker's compensation insurance. Such a policy compensates a business against its legal liabilities towards accidental or fatal injuries sustained by employees during working hours. For example if an employee trips and falls in a grocery store, it’ll help cover that.
Although this is required by federal law, the administration of this benefit is at the state level.
State and federal unemployment taxes, but only if (1) they pay wages to employees totaling $1,500 or more in any quarter of a calendar year, or (2) they employed at least one person during any day of the week during any 20 weeks in a calendar year, regardless of whether or not the weeks were consecutive. In some states, this is tied to a worker's status as part-time or full time, but you should contact your state workforce agency to learn the exact requirements.
Do you feel a bit lost with hiring your first employee? Check this article out it’ll help you get one step closer to hiring your ideal candidate to take your business to the next level. Read the Tips on How to Hire Candidates for Your Startup.
Pay Your Taxes
This may seem like an obvious one, but each state has different tax laws pertaining to income tax, employment taxes, and sales tax. You can find most requirements online at your state tax department's (sometimes referred to as the Department of Revenue, Department of Taxation, or Department of Treasury) website. The takeaway here is pay your taxes accordingly. Stay up to date on the rules and regulations as they can vary year by year.
Pro Tip: Opening a business bank account can help make tax season better because you’ll be able to keep track of expenses and cash flow.
We’ll jump right into opening a business bank account below. Just keep your eyes open. We’re almost to the end!
Open a Business Bank Account
A business bank account is separate from your personal bank account. It allows you to keep track of business expenses, simplifies the tax reporting process, and deposit payments for your business. It plays an important role in protecting both your business and personal finances and here’s why.
Why is a Business Bank Account Important?
All businesses should open a business bank account when they first begin. It’s a great way to maintain professionalism and it also makes it simpler to run your business. Who doesn’t want that?
Also, should you run into legal issues, a business bank account will help to protect your personal assets. Here are some of the reasons why you would want to open a business bank account.
Clear and Separate Financial Records
The biggest reason that opening a business bank account is recommended is that it mitigates the complications of mixing business and personal finances. By separating your expenses and other financials, you can keep track of budgets and track the cash flow of your business more effectively.
By keeping your business and personal finances in separate bank accounts, you will have a clear audit trail that allows you to have a good picture of your annual taxes and deductions. That’ll make life so much easier!
Protecting Limited Liability
Second, opening a business bank account for your LLC will ensure the protection of your own liability because your business and personal funds will remain separate. That’s why you got an LLC in the first place. Protection.
Since LLCs are considered separate entities from the owners themselves, yourself, in this case, you can’t personally be held liable for the debts of your company. However, this does not mean your personal assets are 100% protected from any mishaps your business may undergo. There are some cases in which the owners of the LLC are held responsible for the company’s debts through legal proceedings. This is called “piercing the veil.”
LLCs may run into this issue when they do not adhere to corporate regulations, which include maintaining detailed records of important decisions and meetings. It is crucial that LLCs follow these rules to avoid “piercing the veil.”
In order to lower the risk of having your personal assets seized should your LLC fall in debt, you should take protective measures. One of the best ways to protect yourself is by opening a business bank account to completely separate all of your company’s finances from your other finances.
Okay, who doesn’t want to save money during tax time?
When it comes to paying your taxes you want to get as much out of it as you can. How do you do this? By opening a business bank account, you are making it easier for yourself to track your funds and financial transactions, which will make it all the more simple when you have to file taxes.
Additionally, only businesses are really able to deduct a ton of expenses. If you use your personal bank account to manage your business transactions, the government will not view those financials as part of your business, and thus, you will be unable to deduct most of your expenses. What a waste right?
In the case of an audit, it will be infinitely more difficult to track each individual transaction to identify whether it was business-related or not. And you don’t want the penalties, fees, and headache when everything gets questioned by the IRS.
A business bank account will remove financial complications. You should also keep in mind that you have to use a different form when filing taxes for your business versus your personal taxes.
What Do You Need to Open a Business Bank Account?
When you go to open a business bank account, there are a few things you will need to do. First, you should choose a bank that fits your business needs. Then, you should make sure to have your business documentation prepared so you have everything in line to open the bank account.
Business Documentation for LLCs
Generally, banks will require similar documentation when opening a business bank account for your LLC. Make sure to have these documents prepared when you go to open your account.
- Employer Identification Number (EIN)
- Business address
- Mailing address
- Registered agent
- Personal identification
- Business licenses and permits
- Certificate of formation
- LLC operating agreement
- Articles of organization
So, what have we learned? After forming your LLC, it is important to open a business bank account to keep your personal finances separate from your business ones. It provides clear financial records that are easy to keep track of, protects your limited liability, and helps you to save money. In order to successfully open a business bank account, you will need to provide business documentation related to your LLC.
There you have it! Everything you’ll need to do AFTER forming your LLC.
In summary, you’ll need to maintain your annual reports (if you change your address and registered agent information update it here) and pay the fee so you legally operate and stay compliant.
Second, obtain your licenses and permits that you’ll need to get on the federal, state, and local levels. Check your state website for all of this.
Third, be sure to file all the necessary forms for your first employee. Do this ahead of time if you know you’ll want to hire in the next 3-6 months so you aren’t scrambling to hire.
Fourth, pay your taxes and stay updated with all the ever-changing rules and regulations. If you’re unfamiliar with this part find a professional accountant.
Last, but not least open a business bank account in order to operate with clean financials and protect yourself and your LLC.
Do You Need a Physical Address to Open a Business Bank Account?
Are you in need of a real physical address to open your business bank account? VirtualPostMail (VPM) has the solution for you! VPM offers an easy way to obtain a true physical address that complies with all legal requirements and bank regulations. Learn how to get a physical address for your business bank account here.