What’s Needed After Obtaining Your LLC.

Okay, I’ve preached the importance of an LLC and why you need one for the past few weeks. So now that you have one (because you listened and actually registered your business with your Secretary of State) lets discuss what’s next 🙂

LETS TALK ABOUT IT!

You have your LLC? Wow! Congrats King; Congrats Queen on taking that step to secure your bag! Remember, we operating legitimate businesses ALL 2022 and beyond!

Operating Agreement

Whether you are a single member LLC or a multi-member LLC, I suggest you get Operating Agreement! An Operating Agreement is an agreement or binding contract that outlines the roles of the members in the LLC. This important document also details the business’s and member’s financial obligations.

When registering your LLC with your Secretary of State, you designated whether your LLC will be member-managed or manager-managed. Some state’s laws will vary and so you may have had to designate a manger. Either way, within your Operating Agreement you can detail whether your LLC will be member-managed or manager-managed.

A member-manager LLC is one in which all members take on the role of managing the business. The OA can detail what each member is responsible for. It will specifically outline the purpose of the business and the day-to-day responsibilities for each member.

A manager-managed LLC is set up to have at least one manager who is responsible for the day-to-day management of the business. The manager(s) will be the ones who manage the business, and the members act as just that, members. However, even if a business is manager-managed the OA can specify that certain or all decisions must be decided by all members.

The OA will also outline the financial obligations of the business and its members. It can include the initial startup amount and the investment contribution of each member. It can also include the percentage each member is responsible for. For example, a two-person LLC at 50% each would detail each member is responsible for 50% of the profits and losses.

In total, the Operating Agreement can be as flexible as you choose. It is totally up to the members. Just remember that you must follow what is outlined in your agreement. Also, even if it is a standard Operating Agreement, I strongly recommend that you at least have something in writing detailing what everyone is responsible for. Overall, having an operating agreement is basically the law for your LLC. Not having an Operating Agreement subjects your LLC to the rules of the state the LLC is registered in. Oh, and some banks require a copy of your operating agreement to open a business bank account.

EIN

After you get your business and Operating Agreement squared away, I suggest you obtain your EIN. Your EIN or Employer Identification Number is basically the social security number for your business. It’s free to obtain and the process is simple.

To get your EIN, go to irs.gov and apply for your EIN online. If done during business hours, you usually get your EIN right then and there! Your EIN is a 9-digit number issued to the business for tax purposes. Whether you have employees or not, it is beneficial to obtain because it is needed for business banking and business loans.

Business Banking

A business bank account is an absolute necessity. I do not care if you have to pay for it or if you find a free one. IT IS A NECESSITY! Once you register your business with your Secretary of State and obtain your EIN, you are eligible for business banking.

You can choose where you want to bank whether it be a credit union or commercial bank. The goal however since you are just starting out is to find a place that offers free checking to small businesses.

Both Citizens Bank and First Horizon Bank offer free small business bank accounts. Other banks such as Chase, Capital One, and Wells Fargo provide the option to waive the service fee with certain requirements. I suggest doing some research to find the perfect banking option for your needs. Most banks have the specifics of what is and is not included with their accounts. However, if you have any questions you should set up an appointment and speak to them about it in person. I suggest in person because it yields the best results (in my experience).

Choose your bank wisely and be diligent in maintaining your business bank account. Remember, this is the foundation to start building your business credit. (OPM – Other People’s Money – all 2022 and beyond)!

Don’t get caught up on the name of the bank or how big/small the bank is. Just get what you need and keep moving. You will learn more and grow in time!