A 10-Point Actionable LLC Checklist for Entrepreneurs

LLC Checklist

Most small businesses are overwhelmingly LLCs.

The LLC is the base for starting a US business. And it’s one of the simplest entities you can establish.

Here’s why I believe you should have an LLC:

  • Protect your personal assets from legal action.
  • Stop double taxation.
  • Enjoy a flexible business structure.

With just 27% of people thinking that economic conditions are good to excellent, I believe that now has never been a better time to get started.

That’s why I’m here to make this process easy.

Email today at sam@mollaeilaw.com and I’ll show you how to incorporate your LLC.

In the meantime, this is my LLC checklist to demonstrate what you need to consider:

 

Step #1 – Choose Your State

One advantage of starting an LLC is that you can establish it in any state.

But which state you should you establish your LLC in?

For the vast majority of people, the best state to incorporate your business in is the state you intend on operating in primarily. Most entrepreneurs will see no benefit from targeting business havens like Delaware, Nevada, and Wyoming.

The reason for this is that to operate in another state you would have to get the appropriate licenses as your business would be a foreign entity.

My recommendation is that you stick with your home state.

However, if you get in touch with me at sam@mollaeilaw.com I can examine your business and provide you with some advice. In a limited number of cases it can be beneficial to establish your company in an alternate state.

So why would you want to establish your business in another state?

An LLC that establishes in another state usually does so because they operate exclusively online. There’s no law that states you need to have a license to ship to every state in the US.

It would be impractical to enforce, and it would require online businesses to maintain 50 different licenses at once. In this case, it’s beneficial to establish yourself in a low fee low tax state.
But keep in mind that where you live can affect whether this is worthwhile. US citizens may still find it better to incorporate an LLC in their home states.

Non-US citizens who don’t reside in the US will find it better if they use a state like Delaware to incorporate.

 

Step #2 – Choose a Name and Check for Availability

The official name of your LLC is the name that will appear on any official documentation. Every state has its own business entity directory for entrepreneurs to compare their proposed names against.

Take note that some states may have rules on naming conventions.

For example, California has a rule that states you must have a name that has ‘Limited Liability Company’ or ‘LLC’ at the end of it.
Then there are states that also demand you take out a separate license if your trading name is different to your official name. Again, California is one state that enforces this.

It can be helpful to choose your brand name and make it as similar as possible to your official name to avoid additional costs.

 

Step #3 – Have a Business Lawyer Prepare and File Articles of Organization

Most states require you to file articles of organization. These articles generally introduce your business on a formal basis.
Here are the pieces of information that you’ll be expected to include:

  • The name and address of your new LLC.
  • The nature of the LLC’s business, which can be boiled down to what your company does.
  • The name and address of your registered agent.

You should hire a qualified business lawyer like me to do this for you as there are a few caveats you have to consider.

One example of this is the way you describe the nature of your business. If you’re too specific it could limit what your LLC could legally do later.

There’s a full LLC checklist that business lawyers will have for this.

Make sure you get it right the first time by hiring a professional.

 

Step #4 – Have a Business Lawyer Draft an Operating Agreement

An operating agreement is not required by law. It’s an agreement between the different members of an LLC, and it’s highly recommended that you have one.

Your operating agreement should feature as part of your LLC checklist to avoid any potential disputes later.

It will determine everything from voting rights to the share divisions of the company. It also includes the responsibilities each member has.
There are no conventions when it comes to your operating agreement as you can be as broad or as specific as you want. It all depends on your business.

Contact me at sam@mollaeilaw.com and I’ll discuss the needs of your business with you. I’ll also be able to provide you with detailed recommendations on the shape of your operating agreement.

Just send me an email at sam@mollaeilaw.com and let’s get started!

 

Step #5 – Prepare an LLC Membership Certificate

The next step in your LLC checklist is to begin preparing your LLC membership certificate. These certificates are the equivalent of a stock certificate and detail that you’re a member of the LLC.

There’s also a type of certificate that details the existence of the organization, but you won’t get one of these until your application for a new LLC is accepted.

Your certificate of organization must contain at least one member’s name.

The format of the certificate can usually be found online. But if you use the help of a business lawyer, the preparation of the various certificates relevant to your LLC will be taken care of by them.

 

Step #6 – Apply for Your EIN

Your EIN is how your company is recognized by the government. You’ll need this to do everything from opening a bank account to filing your taxes.
US citizens will find this relatively easy. All you need is your social security number to apply online through the IRS website.

If you’re not a US citizen and you do NOT have a Social Security Number (SSN), email me at sam@mollaeilaw.com and I can help you apply for your EIN.

 

Step #7 – Open Your Bank Account

At this stage of your LLC checklist your LLC will exist and now you need to connect it to the financial system. Opening a bank account at this stage will depend on the bank you use.
We can’t recommend any specific bank here, but all the major names are perfectly acceptable for a new LLC.

Make sure you review the various offers and promotions available for new LLCs in your area. Things like waived fees for the first year and access to business consultants are just some of the perks various banks might offer you.
I always say that a business lawyer like me can be helpful for not only when opening a bank account but opening it fast. The waiting time is always shorter if you have a qualified professional on your side.

But keep in mind that it’s always good to visit your branch in person, if possible. A good relationship with your bank manager is essential for any LLC.

 

Step #8 – Apply for any Necessary Business Licenses or Permits

Nearly every state will require you to have at least one business license to operate. This applies to both online and offline businesses.

These permits are usually distributed based on the county or city you’re established in. It will be necessary to apply for the necessary licenses through your local portal.

However, I can advise you on the licenses and permits you’re likely to need. This is why your articles of organization need to be crafted in such a way as to make sure you only have to pay for the minimum number of licenses.

That’s why you should consult with me before applying for any type of permit.
I also need to make a point for LLCs that intend on operating in multiple states. As mentioned before, you’ll be considered a foreign entity if you want to do business outside of your home state.

Foreign entities must apply for separate business licenses to operate in these states. And it can get expensive fast.
That is why most LLCs will choose to incorporate in their home states, as opposed to places like Delaware.

 

Step #9 – Connect with an Accountant to File Your Taxes

It’s always wise to plan ahead, so you should connect with an accountant immediately. This is necessary for preparing for tax season.
Too many LLCs don’t take this into account until tax season hits. In their panic they choose the first accountant they see and get a bad deal.
You should already have an arrangement in place for sending them the necessary information. It also helps to know the type of information you need to have to file in your state.

 

Step #10 – Understand Your Recurring Responsibilities

The final step in your LLC checklist is to make sure you are aware of the ongoing responsibilities your LLC has. These will typically happen every year and you will need a procedure in place for compliance.

The problem with these responsibilities is they typically differ between states. But the usual responsibilities you can expect to confront include:

  • Renewing business licenses.
  • Filing state taxes.
  • Filing Federal taxes.

This can get even more complicated if you do business in multiple states.

To make sure that you comply with all the necessary rules, you should hire a professional. I can help you ensure that everything is taken care of with a minimal amount of hassle no matter where you’re incorporated. Just send me an email at sam@mollaeilaw.com with your questions.

 

How Much is Following this LLC Checklist Going to Cost?

Many entrepreneurs are concerned about the price of incorporating an LLC. But the truth is it should cost no more than a couple hundred dollars.
Bootstrapping the whole process will cost an extremely small amount. Most states charge fees of between $50 and $100 for incorporating.

Various business licenses and permits usually cost about the same.

Hiring a professional will cost slightly more. But what you get in return is a stress-free process that can be completed in just a few business days.
In states like California it can take up to a month to successfully incorporate your LLC. And that’s before you can begin the process of getting your EIN and opening your bank account.

Professional business lawyers can get that same process done in two to three business days.

You need to consider whether you have the money, or you have the time. Spending a little more ensures a faster LLC incorporation and one with no mistakes.

 

Can I Open an S-Corporation Instead?

If you’ve read through this LLC checklist and you’re wondering if an S-Corporation is a better option, you should know that the process is practically the same for opening your business.
The difference is an S-Corp brings together the advantages from a corporation and the best of an LLC via an IRS declaration.

But the disadvantage of an S-Corp is that you must be a US citizen to open one. Plus, every member of that S-Corp must also have US citizenship.

That can make it difficult to bring in outsiders later. For non-US citizens the LLC requires a minimal amount of hassle.

 

Conclusion

It may seem complicated to open an LLC in the US. But with my help I can guide you through the entire process.

You just need to provide me with the required information and I’ll make sure that your LLC is up and running in quick time.

I’ll simplify the process and ensures you have all the right information to make the correct decisions.

Just email me at sam@mollaeilaw.com to get started