- Hi, everyone, I'm attorney Aiden Durham, with 180 Law Co. in Denver, Colorado, and you're watching
All Up In Yo' Business. (soft music) In this episode of All Up In Yo' Business, I'm gonna tell you guys about
some of the important steps that you need to take after
you've formed your LLC. But first, don't forget to
like, subscribe and share and be sure to check the description for links to additional
information and other resources. I've got a free guide down there, telling you guys about
how to pay yourselves in a single member LLC. All kinds of fun stuff.
So check that out too. Alright, so for most of us, if we're gonna be starting a new business, often one of the first steps if not the very first step
that we're going to take is to form our LLC. But forming the LLC really is
just one of the first steps, it's certainly not the only step. And there are a lot of
things that you need to do after forming the LLC to be, you know, a legal, legit business able to operate your
business the way you want to, there are a few other
things you've got to do. Specifically, I've got seven
things that you should do after you've formed your LLC. The first thing. Number one,
after you formed your LLC, is to get your Operating
Agreement prepared. Now you can find lots of templates of Operating Agreements online, other online services, of course you can work with an attorney to have your Operating Agreement drafted. That's what I recommend, especially if you are having
other members in your LLC that's not just a single member LLC, your business partners, then it is really that much more important to have an attorney
help you with preparing the Operating Agreement, because these online templates and kind of standard forms aren't always going to work
out best for every situation. So what's the point of
the Operating Agreement? It's the agreement amongst
the members of the LLC and the LLC itself. And it describes how the LLC is managed, whether it's member or manager managed. It describes how decisions
are going to be made, what kind of a vote is required, majority or unanimous, supermajority, how decisions are going to be made, it will typically describe how the members can take
distributions like in what, at what times or what kinds of situations
distributions can be made, how taxes will be allocated. It will often describe what happens if one member becomes
disabled or deceased, or gets a divorce even. So it always looks a little different but the point of this Operating Agreement is that it helps to manage the
internal workings of the LLC. And even in a single member LLC, the Operating Agreement is
as equally as important. Even though it's just you
who you're dealing with, you don't have to make
decisions with anybody else, you don't have to deal with
anybody else inside the LLC, but even in those situations, an Operating Agreement
is a really good idea because it helps go towards the Personal Liability
Protection that we're looking for out of the LLC in the first place. So if you're gonna go through
the trouble of forming an LLC, because you want the Liability Protection, then you need to do the other things that help you get that
Liability Protection, which includes having that
Operating Agreement prepared for you as well. After the Operating Agreement, the next thing you wanna do is get an EIN or an employer
identification number, a tax ID number for your LLC. This is done through the IRS and in a lot of cases you
can apply for it online, @irs.gov and you get the EIN right away. Sometimes in some situations, we have to submit it via fax or call in or mail the application. But in most cases, you can do
it all online and it's free. The EIN is like the Social Security Number for your LLC. In single member LLCs, there's no requirement
that you have an EIN. Unless you know if you have
employees or something, then you do need it. But if you're just you you're the only person
working for your company, you're the only member, then the IRS in most cases
doesn't require an EIN. But we still typically want to get it because a lot of banks will require it and I'm about to talk
about banks in just a sec. But typically we're gonna need an EIN for banking purposes. And again with LLCs, the point of forming one is protecting your Individual Liability. And with that comes separating
yourself individually from your business. And so the EIN is one other way to do that it's assigning a separate tax
ID number for your business, which isn't you. And so then when you have your EIN, the next thing you need to do is open up a business bank account. This is really one of the
most important things to do after you've formed your LLC and one of the things that
I see most commonly missed. A real common thing that
especially single member LLCs do is they'll kind of just keep
everything in one account, their personal money
and their business money in one account cause it's all, you know, "it's all me, "and why would I need to separate it out, "it's all my money." But it's not, it's not all your money. The business's income
is the business's money. And so once you've formed your LLC, one of the very next steps you should do is opening a dedicated business account, or two or three or 12 or 15. You don't have to have just one, you can have multiple business accounts. But a dedicated business account where the expenses will be paid, income will be deposited, and then you only touch that money when you're taking
distributions for yourself or you know, for other you know, paying yourself from it is
the only time you personally, get your hands on any of that money. The fourth thing to think about
after you've formed your LLC is looking into any required
licenses or permits. So this is going to very much vary, depending on where you are, your state, county, your local jurisdiction, your
town or city jurisdiction, that's all going to vary. So you're gonna need to do
a little bit of research on your own or have someone
help you with that, of course. But in a lot of situations, some kind of license or
permit might be required. So in Colorado, it's not terribly uncommon for some of our towns or cities to require just kind of
general business licenses. So just to operate a business
within the city limits, or the county or something they might require just a
normal business license, no special word. But sometimes they require a
home based business license. Some local jurisdictions
have that requirement. If you're gonna be operating
your business out of your home, then you need a particular
license or permit for that. Of course, you know any licenses that might be
required for your profession. Hopefully you've already
kind of gotten those underway before you've even formed the LLC. But if you are some
profession which is governed or needs licensing, like
attorneys, or maybe estheticians, hairdressers, contractors, you know, the possibilities are endless but again, this is going
to very much depend on your location or where
your business is located and the specific requirements
in your situation. And again, this kind of goes into some other sorts of licenses or permits such as seller's permits, or sales tax licenses or even payroll withholding licenses. So some states or some jurisdictions would require a Seller's Permit, which I think often is kind of the same as
a sales tax license. So some license or permit
that's going to be required if you are required to
collect and report sales tax or if you are hiring employees, then I believe most states require some kind of a payroll
withholding license, something where you are licensed
to withhold payroll taxes and all of that. Another important thing to think about after we've formed our LLC is insurance coverage and making sure we've got
whatever insurance policies we might need and or want. So for most businesses, some kind of general
Liability Insurance Policy is going to be beneficial. Now these policies will
apply to, you know, general Liability. If you have let's say, an
office or a retail space or something where people are
coming into your location. If someone comes into your
office and slips and falls, that liability will most likely you know, land on your business or your business might be
involved in that somehow and your insurance
coverage is going to help to pay for you know, legal
costs defending that lawsuit, might help to pay out any damages if the person who was injured was awarded some damages your insurance coverage is
gonna help to cover that cost. Often it'll apply if
you're driving your car for business purposes and
you get in an accident. Even if you don't have a physical space, even if you don't see
customers face to face, there are still a lot of opportunities for liability to arise. And insurance is going to help to insulate your business's exposure. And so insurance again can
be just general Liability. But there is also a lot of
situations where you might want some kind of Professional Liability or errors and omissions insurance, malpractice insurance, depending on your industry
or your profession, it might be called something different. But something that covers
if you give bad advice, or if you give someone
the wrong information in your professional capacity, they can sue you for that. And so that's what that
Professional Liability or errors and omissions insurance is gonna help to cover too. So when it comes to insurance, it's always going to
look a little different depending on your business and your area, and what kind of work
you do, and all of that. So it's good to talk with an
experienced insurance broker, someone who can help you figure out the best kind of coverage that you need and the proper amounts of
coverage and all that too. Once we've got our
insurance taken care of, the next thing that we need
to think about is contracts. Before we even start, like
helping anybody with our service or selling our product
or anything like that, there's most likely going
to be some contracts that we might want to think about. Even let's say if you're a website, if that's what your business
is, you've got a blog, or if you sell products on your website, something like that. Your website should
have at a bare minimum, Terms of Service or Terms of Use and a Privacy Policy. Those are both technically contracts because it's you and while your business and their website visitors or your customers agreeing to these terms. So if you have a website, then you should have Terms and
Conditions for your website and a Privacy Policy. If you are a service
provider, like a consultant, or a coach, or a lawyer or anyone
else providing a service, any kind of professional service or you know, business to consumer services and Home Services, you want a contract between
you and your customers that describes what
service you're providing and what you're expecting in return, and what your customers are expecting what happens if something goes wrong, what happens if payments
aren't made in time. All of those situations you
want to have covered in writing in a contract. So again, contracts are gonna look
different for every business, every you know, type of situation. So if you're trying to decide what kind of contracts you need or what would be good
for you to have prepared, it's a good idea to talk
to an attorney about that who can help and learn
more about your business and figure out what types of contracts are gonna be necessary for you. And then lastly, this
is kind of an easy one but I believe every state, if not every state, most states have some annual
filing requirement for LLCs. You don't just file your
Articles of Organization and then you're done and you
never have to worry about it. Most states are gonna require that you file some kind of
report on an annual basis. And some states might send you
reminders when that happens but not all of them do or sometimes those reminders
go into our spam mail folder or we just miss them. So as soon as you filed your LLC, I like to set reminders on my calendar of when those annual
reports are going to be due. Typically it's going to be with, you know by the first anniversary
of your LLC filing that is gonna depend on the
state and the requirements but it's usually gonna be about a year after you've formed your LLC. So, figure out what that date is gonna be and mark it on your calendar now so you don't miss those deadlines. So to summarize, the seven things that you need
to take care of or consider after you've formed your LLC. Operating Agreement, getting a EIN or a tax ID number, opening a business bank account, getting any required licenses or permits, getting proper insurance
policies and insurance coverage, drafting any required
contracts or agreements. And finally, marking on your calendar when any follow up compliance
reports, periodic reports, annual reports are going to be due getting those on your calendar
now so you don't forget. Certainly that's not everything that everybody's gonna have to do. Everyone's situation is going
to look a little different. So it's always a good idea to talk to an attorney in your state when you're forming an LLC to make sure that whatever
special requirements might apply to you, you're covering those. Because it's always going
to look a little different. And again, like I said, forming the LLC is really just, you know, the first step in the process. It's nowhere near the only step. That's all for this episode, folks. Drop a comment below. Let
me know what you think and don't forget to check the description for links to additional
information and resources. I've got a online platform that lets you form an LLC in
any state, online, instantly for, very inexpensive. So if you're going that DIY route, you can check the description
for that link as well. Thank you all so much for watching. I'm Aiden Durham, and
I'll see you next time. (soft music)
