What To Do After Forming an LLC - 6 Crucial Next Steps (2024)
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- Опубликовано: 10 июл 2024
- Attorney clearly explains the next steps after forming your LLC to prepare it for success and to protect your personal assets. This includes 6 critical next steps you must take (plus some bonus tips).
It's important to follow certain steps after you form an LLC to ensure liability protection and personal asset protection. I'll take you through 6 primary steps with 5 additional tips for after an LLC is created. You will learn exactly what to do after forming an LLC.
If you are interested in a more comprehensive and detailed Next Steps Guide (with examples), a related company of mine has a 21-page roadmap on how to protect your assets and to set up your LLC for success. The price is way too low for what you get (in my opinion). Check it out at: www.attorneydrafted.com.
If you want a very high quality attorney-drafted Operating Agreement (and/or other contracts and forms), that same company is offering them at a fraction of the price you'd pay an attorney. If interested, go here: www.attorneydrafted.com.
If you want a free template Operating Agreement, I have a video walkthrough on how to create an Operating Agreement for free here: • Operating Agreement fo... .
If you want more details on what should go into your LLC Operating Agreement, go here:
• What to Include in You...
If you need an EIN (Employer Identification Number / Tax ID) for your LLC (or other entity), I show you how get one quickly and for free here: • How to Get an EIN Numb...
If you or your entity are in California and need an attorney for entity formation or contractual matters, learn more here: www.chrisjacksonlaw.com.
Thank you!
Best regards,
Chris Jackson
@cjlawvideos
00:00 Intro: What To Do After Forming an LLC?
00:35 6 Steps After LLC is Set Up
00:56 Why it's Important to Take These Steps
02:04 Step 1: LLC Operating Agreement (What to Include)
04:39 Step 2: LLC Tax ID (EIN)
05:14 Step 3: Open LLC Bank Account
06:19 Step 4: LLC Business Permit/License
06:30 Step 5: Business Insurance for LLC
06:50 Step 6: S Corp Tax Status (Form 2553)
07:58 Bonus Steps After Forming an LLC
//BIO//
Hi, I'm Chris Jackson. I have over 25 years of experience as a business attorney. I'm also an entrepreneur who has owned, managed and sold at a significant profit multiple franchise coffee houses. In addition, I have finance and operational experience as a Chief Operating Officer (COO) of a large company. I just started this channel in February of 2023 to share information which I hope you will find valuable.
//DISCLAIMER//
Disclaimer: Note that nothing in this video is intended to create an attorney-client relationship. This video and my channel are for general information and entertainment purposes only and should not be construed or relied upon as legal or tax advice (generally or specifically). You should not act or rely on any of the information contained herein without seeking professional legal advice.
#llc #limitedliabilitycompany #assetprotection #llc2023 #llc2022
I hope this video on what to do after you form your LLC was helpful. For more information related to LLCs, visit my channel here:
ruclips.net/channel/UCh-xmIMrn_SM3yax85O9U6A
Thank you for watching!
Thanks Chris. Video is very helpful to me.
@@elguapo3811 I'm glad to hear it was helpful, thank you. Let me know if you have any questions, and best of luck to you! -- Best regards, Chris
Your dog stole the show! He is adorable. Thanks for the helpful info.
Thank you. And, yes, everyone knows he's the real star of my channel! Thanks for watching, and I'm glad you found it helpful! Best regards, Chris
Outstanding job!
Thank you very much! I appreciate the kind words. Feel free to reach out if you have any questions. Best regards, Chris
Loved your tips. Thank you.
Glad it was helpful, thanks! Best regards, Chris
Thank you for sharing your knowledge, very greatful.
You are welcome, and glad you enjoyed it! Best regards, Chris
Thanks for the content, I enjoyed every bit of information.
I appreciate that, thank you!!
This is so helpful! The general overview gives just the right amount of info--I don't need to get into the weeds just yet. Will most likely watch the rest of your videos. Thank you!
Thank you for your kind words ... glad you found it helpful! If you do want to get into the weeds in the future, note that a related company of mine is selling a "Next Steps Guide" which provides a simple yet detailed explanation on how to set up your LLC for success. If you are interested, you can go here to learn more: www.attorneydrafted.com. Best regards, Chris
Great info thanks
Glad it was helpful, thanks! Best regards, Chris
I'm liking your videos, Chris. Looks like I'll be binging on them for the setup of my business LLC.
Thank you Chris, much appreciated! Let me know if you have any questions. Best regards, Chris
Good job Chris
Thank you ... I appreciate the kind words! Best regards, Chris
Thanks for the valuable information, it was a great video as always. P.S. One of the best transitions from explanation to apologizing for a squeaky toy I have ever seen, it was smooth and effortless. Entertaining and educational at the same time.
Thank you! I appreciate that. Happy New Year.
Thank you sir. Hope you make more videos
Thank you for watching and for your kind words. I will be making some more videos soon, thanks!
Your eyes pierce my soul.
Ha! Thanks.
love your dog!!!
Thank you ... he is the best part of my videos!
I loved the dog squeaky toy sound
Thanks. That was totally unexpected, but I guess he was getting tired of me talking about LLCs (and who could blame him?).
I'm from Florida but i enjoyed the video! Thank you! i was laughing and didn't hear your dogs name but i was thinking it would have been hilarious if you had named him "Action" bc his name would be Action Jackson! lololol lmbo
Hi Renata. Glad you enjoyed the video, thanks! Our dog's name is "Jax," but I agree that "Action" would have been better (especially given how energetic he is). Thanks! Best regards, Chris
Great Video very informative and clean any tips for a day trader? You have a new sub by the way keep up the good work!
Thank you for the kind words and the follow! No day trading tips at the moment, but I am dabbling in trading e-mini S&P futures in my free time. I'm not sure if you need an LLC for day trading unless you are going to turn your day trading into a business via RUclips instruction videos or otherwise. Let me know if I did not understand your question, thanks!
Another great informative vid Chris! Okay, so say as a supposition you (as a biz attorney are paying yourself), by law an Llc must use payroll. And for you it's using Patriot Software, right?
Lastly, it's worth noting that Jack's squeezed his toy loudly at the exact moment when "Distributing of Profits" was the topic. He knows what's up when it comes to his distribution of doggy dollars!
Hi. Thank you for your positive feedback. It is much appreciated! Yes, Jax is very astute and is the real star of my channel (as everyone knows).
Regarding payroll software, I think Patriot is a good option. However, I actually just use QuickBooks Online for accounting and payroll. I would try both and see which one fits you best. Best regards, Chris
Thank you for sharing clear and precise information. Will there be a video about how to file an annual report with your state, soon?
Hi Ivy. Thank you for your kind words ... they are much appreciated. A video on how to file an annual report is a great idea, and I thank you for suggesting it! I'll keep you posted, thanks! Best regards, Chris.
lol the way your facial expression doesn’t change when you look at the dog ,😂😂😂😂😂
Ha! Thanks! I can't remember what I did in that particular video, but if it was when he was chewing on his squeaky toy, I am used to that (though not while I'm making a RUclips video). 😂
Chris, your videos are extremely informative and appreciated! At 9:05 you mention one or more credit cards should be used only for your business, I'm assuming you are referring to the business credit card and not a personal card, since a personal card can give cause to pierce the veil of the LLC?
Hi. Thank you for your kind words. Yes, it is preferable to get a business credit card. However, since your LLC will not have credit right away, you will likely have to apply for it in your own name. But, you can put the business name on the card in many cases. Regarding personal credit cards, what is most important is that, if you choose to use one for business, you should (i) pay it off first with personal funds before charging business related charges (if possible), (ii) strictly designate that card for business purposes going forward and use it only for business expenses, and (iii) pay the business charges from your LLC's bank account. Those same principles ((ii) and (iii) above) apply to a new business card of course. Hope that helped. Best regards, Chris
Thank you sir for your channel. I'm looking to form a new LLC, my question is about the initial funds for the bank account. If I use funds from my personal bank account to establish, is that considered co mingling?
Hi John. Thanks for you comment and question. While I cannot give specific legal advice without an attorney-client relationship, I will say generally speaking that it is fine to use personal funds initially to set up your LLC. Then, once you create your LLC and open an LLC bank account, you can transfer personal funds into the LLC bank account. After you do that, all LLC expenses should be paid out of the LLC bank account.
In your LLC Operating Agreement, you can include the personal funds used to establish the LLC plus the funds transferred into the LLC bank account as your initial "capital contribution." You can also book some of it as a loan to the LLC, but that is more of an accounting issue. I just wanted you to know it's an option.
I wish you and your LLC all the best, and let me know if you have other questions! Best regards, Chris
Hey Chris & Puppy 😊! Thank you for the content! Very helpful! I recently filed my llc through bizee (incfile). I received all the documents, including the template operating agreement. I noticed at the bottom of the operating agreement they left a blank space for signatures. Do we need to sign the bottom and have it notorized? Thanks again!
Hi. Thank you for the kind words. And I'll give your regards to my puppy Jax. The Operating Agreement is an internal document that you should sign and follow. You don't need to have your signatures notarized, so no worries there. Note that, if you want a more comprehensive Operating Agreement (for free) than the one provided by Bizee, then I show you how to create one on your own in this video: ruclips.net/video/-7NH95aM2YQ/видео.html. If you want an attorney-quality Operating Agreement at a fraction of what you'd pay an attorney, note that a related company of mine is about to launch a legal template service. The Operating Agreements are done, but I have not yet finished the video instructions. If you are interested, you can check it out here: www.attorneydrafted.com. Thanks, and best of luck to you and your LLC! Best regards, Chris
@@cjlawvideos thank you so much for responding!
@@lolkk3394 You're welcome, and best of luck to you and your LLC! Best regards, Chris
Can you please tell me on the EIN what tax option you choose ? Also do you have more information on the s corp form ?
Hi. I cannot give tax advice, but many people choose to file Form 2553 and elect S corporation tax status (other than for LLCs owning real estate). If you watch my videos on how to set up your own LLC in, for example, WY (here it is: ruclips.net/video/Zl-CxK7L6Hg/видео.html), they will file your Form 2553 for you if you prefer not to do it yourself. For when you have to file that form, here is a Short which covers it: ruclips.net/user/shorts8RoSqg_8PXg?feature=share.
I hope this helps, but let me know if you have any other questions! Best regards, Chris
If you have an LLC with an S Corp, will I be paying for both? The annual tax for LLC and what do you pay for S Corp, when combined? Thank for all the great information 🤗
Hi. Thanks for watching and for your question. Note that S Corp election is only for determining how your LLC will be taxed. It does not create a separate entity with additional fees fortunately, so no worries! Hope I answered your question, but if not please let me know. Thanks! Best regards, Chris
Thank you for your video, I want to start my business early next year as soon as possible. How long will it take to complete all these steps? Also, how long does a business license and LLC usually tend to take to be completed?
Hi. Thanks for your comment and questions.
For the formation of the business, that depends upon which state you are choosing and whether you choose to expedite the filing. For example, in CA, the normal wait might be 5 weeks for the standard filing and 8 days for the expedited filing. In Wyoming, for an extra $50, you can get it filed in 24 hours. Here is a link to my video on how to file through Incfile in Wyoming: ruclips.net/video/Zl-CxK7L6Hg/видео.html. And, here is one that is for filing on Incfile in general which also covers CA: ruclips.net/video/rf6ake4zxcg/видео.html
For the Operating Agreement, Incfile will provide a basic one. However, if you want one that is more comprehensive, here is a video on how to obtain one for free: ruclips.net/video/rf6ake4zxcg/видео.html. Both will be done in one day.
For the EIN, Incfile will obtain that for you if you choose the Gold or Platinum option. Or, if you want to get your own EIN for free via the IRS website (in one day), here is a video on that: ruclips.net/video/sEJnB0nfHrA/видео.html
For the bank account, you should be able to open one in a day once you have the filed Articles, the EIN and the Operating Agreement (if required).
For business permits, if you need one, that depends upon your city/county.
For business insurance, you can get that in a day or two.
To file for S Corp Status (if you choose that), Incfile will do that for you. But, it can be done in a day (or more if you have to mail the form)
Hope that helps. If you need my help with anything, feel free to reach out through my website: www.chrisjacksonlaw.com
Best regards,
Chris
@@cjlawvideos thank you so much, that was very helpful.
Went to the website; it only says “coming soon”. Anything?
Hi Frank: I'm sorry ... I see now. I believe I fixed it, but please try again and let me know! Here is the link: bit.ly/AttorneyDraftedDocs Note that I'm working on the site where you can download the Operating Agreement. Hopefully it will be ready in a week.
Thanks, and sorry about that! Best regards, Chris
Is there a way to file a “charging order protection” online or best to go through physical attorney?
Hi. I normally put charging order language in the LLC Operating Agreement. Here is a link to a video on how to create a free Operating Agreement and covers some charging order language you can consider using: ruclips.net/video/-7NH95aM2YQ/видео.html. Also, a related company of mine is about to launch a legal template service (attorney-quality at non-attorney prices), starting with an Operating Agreement, and it will include charging order language (and other recommended provisions). To sign up for a pre-sale discount, go here: www.attorneydrafted.com/. Thanks, and best regards, Chris
For a single member LLC can the owner/manager have a separate will appointing a beneficiary/successor or should it be written into the operating agreement?
Great question. Normally the Operating Agreement addresses whether a successor to a Member receives just economic rights (rights to profits but not voting rights) or becomes a full Member (with all such rights). If you are a single member LLC, this is less important for you to address in the Operating Agreement because your successor would be full control of the LLC.
So, to answer your question, you should address it in a will or trust. The membership interest you own in the LLC will be an asset that will be passed down to your heir/successor.
However, if you anticipate having more than one Member, or you add one later, you should address what happens when one Member dies or becomes incompetent. For example:
"If during the Company’s term a Member dies or is adjudicated incompetent or an entity Member is dissolved or a trust is terminated, the Member’s legal representative or successor shall have the rights of an assignee of the Member’s Interest, but not the rights of a Member, unless the legal representative or successor has been admitted as a Member under Section __.
Hope that helps!
Best regards,
Chris
And what happens if you do all of this stuff but you don’t actually have a way to make income to keep your business going? What do you do then? I want to get into real estate investing. But I’m told a personal loan won’t be accepted for most lenders because it’s considered a red flag. I’ve been told that a business loan would increase my chances. But what if I don’t qualify for one? What do I do then?
Hi. Thanks for watching my video and for your question. I cannot give you advice without being retained, but here are some general comments:
You are correct that many businesses do fail. However, if you are going to start a business, I recommend an LLC for asset protection purposes (and other reasons), whether such business succeeds or fails.
Regarding your loan question, I recommend you speak to a few commercial loan bank officers to best understand your options. I suspect that most lenders are going to have you as the borrower, co-borrower (with your LLC) or guarantor. The reason is that new companies generally don't have credit in the eyes of the bank.
The best thing you can do prior to starting a business is to do your due diligence, have a business plan in mind or on paper, speak with bankers if you need a loan, and otherwise do what you can to prepare for success. I wish you and your business all the best ... go get 'em! Best regards, Chris
Should I start an LLC or SCorp?
Hi Gregory. Thank you for your question. While I can't answer it specifically, as I'm not your attorney and am unfamiliar with the type of business, I made a video which compares LLCs vs S Corps (and other entity types). Here is the link: ruclips.net/video/vPc2bt0lCkI/видео.html.
With that said, I generally recommend LLCs because they require less formalities than S Corps. And, you can have your LLC taxed as an S Corp. This combines the best of both entities. If you decide to form an LLC on your own, I have an instructional video here: ruclips.net/video/rf6ake4zxcg/видео.html
Let me know if you have any other questions, and I wish you all the best. Thank you. Best regards,
Chris
Hi Chris. Is there a company that you use, and are happy with, for business insurance such as general liability insurance or a business owner's policy.
Hi. Thanks for watching and for your question. I have used The Hartford, but I hear that Hiscox and Next are also decent options (depending upon your business type). I'd start there. Best of luck to you and your LLC! Best regards, Chris
@@cjlawvideos Thanks Chris. I noticed that Hiscox has a Customer Acknowledgements section that includes the following statement about the business for which one is applying for insurance coverage: "Your business is not controlled or owned by another firm, corporation, or entity." This makes it difficult for people who have an operating LLC owned by a holding company such as a Wyoming holding company, that you also use and recommend. Did you come across anything like this with The Hartford? Have you ever come across this issue in your experience with having LLCs owned by holding companies?
@@user-bp2jj2zn1b Thanks for letting me know. Note that you should confirm whether, if they don't insure companies which have a holding company (owned by you), then they can insure the holding company and its subsidiaries. It may be with Hiscox that they can insure at the holding company level, and that insurance covers both the holding company and its subsidiary(ies). Best regards, Chris
@@cjlawvideos Thanks for sharing that strategy. That is exactly what I did, and now I have business insurance at the holding company level that covers both the holding company llc and its subidiary llc. :) If you were applying for business insurance specifically for the Operating LLC (as I originally tried to do), there is actually an option to select that you disagree with one of the statements in the Customer Acknowledgments section, and then answer follow up questions related to that statement. However, it can still be complicated. For example, upon trying that, it asks what percentage of the business does the entity control, and when you put 100 percent, it won't let you continue with the application because it will only accept a maximum value of 99. Therefore, I decided to use your brilliant strategy, and now I have business insurance. Your channel is a great resource, and you genuinely use it as a platform to share your knowledge and help people.
@@user-bp2jj2zn1b That is great news, and I'm glad it worked for you! Thank you for your kind words, and best of luck to you and your business! Best regards, Chris
Can a manager of a LLC participate in profit sharing if the Operating Agreement has such language in it?
I can't give legal advice. Generally speaking, for a Manager who is not a Member, if you want the Manager to share in the profits, I suggest that you incorporate a bonus structure in the Manager's employment/compensation agreement. Thanks for the question and for watching the video! Best regards, Chris
Are the 4 and 5 steps necessary for a non-resident who sells goods in the usa with amazon, etsy or others ecommerce marketplace?
Hi Samy. Thanks for your question. Regarding Step 4 (Business Permit), those are normally required only by the county or city in which you are doing business. Since you are online and not located in the U.S., you should not have to do that (unless you are required to in your country). Regarding Step 5 (Business Insurance), I have an Amazon FBA account and am required to provide proof of insurance (which I obtained through The Hartford). If you are not required to have insurance, then it's a personal preference. If you are at risk for getting sued for product liability from your sales, then you may want to consider it. Hope that helps, and I wish you and your business all the best!
@@cjlawvideos Thank you very much! A subject that i think would help a lot of people is how an LLC is taxed in the USA for ecommerce business like Amazon fba, dropshipping,... Also how double imposition exactly works. Again thank you very much for your answer.
@@samymounir7336 Thank you for the suggestion! Best of luck to you and your business! -- Best regards, Chris
How do I keep my amenity when I file my PA Llc I have my Wyoming LLC own it.
Hi. Thanks for your question. I am not too familiar with PA, but out of curiosity I tried to see the filings of out-of-state LLCs at the PA Secretary of State's website, and I was not able to see any information. Perhaps you need an account to view the information. However, that's a good sign that PA does not make it easy. With that said, if you only have to list the Member of the PA LLC, you can list your WY LLC as the Member. If they also require that the Manager be listed, and you want to maintain anonymity, you can have the WY LLC serve as both the Member and Manager. I hope that helps! FYI, here is my video on how to form an LLC in WY: ruclips.net/video/Zl-CxK7L6Hg/видео.html.
Best regards,
Chris
For my new LLC in New York i have finished following steps:
-EIN number
-published on Newspapers
-Form 2553 mailed and faxed (waiting for reply)
-Operating Agreement
Pls kindly suggest, do i need business insurance for my sole member LLC?
Did i miss any steps? If so pls kindly let me know. Thanks a lot
-
Hi. Thanks for watching my video. That's great that you've gotten all that done, congratulations. I can't give you legal advice without being retained, but here are my thoughts in general.
Regarding business insurance, it really comes down to the type of business and the likelihood of potential liability.
For example, if you are selling your own or other products via Amazon FBA or otherwise, and there is the potential for product liability (and you are in the chain of custody or sales), then you should get business insurance (and in fact Amazon now requires it). On the other hand, if you are designing websites, I can't see a good reason for business insurance.
With that said, I would shop around and see if you can find some insurance and balance the cost (premium) and potential benefits.
As for other steps, the main one is to open a bank account for the LLC and have all LLC revenue and all LLC expenses flow through that bank account. Also, make sure that any contracts, documents, business cards, websites, etc. let everyone know that your have an LLC (__________________ LLC).
I wish you all the best with your LLC and business!
Best regards,
Chris
@@cjlawvideos Hello! Thanks for your reply and i have one more question.
Do i need seller permit for single member LLC in NY?
@@Gadonekoko Hi. I can't give you legal advice, but if you are buying wholesale and reselling at retail (e.g., via Amazon FBA or otherwise), then you will generally need a Seller's permit. It's best to check with the state of NY. Best of luck!
Would a social club be a LLC?
Hi. Thanks for watching my video and for your question. I am not an expert on social clubs, but I do know that some social clubs are tax exempt if they are not-for-profit. Most non-profits that are formed as entities choose to form a non-profit "corporation." Although you can possibly have an LLC which serves as a non-profit entity, the LLC structure is rarely used, and its use for a non-profit purpose depends upon whether that is authorized by the relevant state's law. Sorry I could not help, and I encourage you to address these issues with a CPA and/or a local attorney who specializes in non-profit organizations. Best of luck. Best regards, Chris
lmao. ( i dont have a show dog but i do have this dog though) thats a show dog imo
Thank you for you comment ... glad you appreciated the humor! And, yes, he could probably be a show dog. He's a handsome boy.