Today I want to talk to you about 8 things that you need to do if you want to start your LLC and you want complete protection. Whether it's how you pay yourself an LLC or how you start an LLC. So, that's where I'm going to give you, I'm going to give you the goods.
Today, we're going to talk about the eight things that you need, if you're starting an LLC.
#1 – Contracts
Let's start with number one, number one is contracts. I just signed a lease agreement for a new office space, a five-year lease agreement, to move my law firm to a new office space. And that is one example of a contract that you might need, if you're starting your LLC. You might need lease agreements, you probably need service contracts, otherwise known as client contracts, engagement letters, et cetera, et cetera. These are contracts between you and your clients or you and the people that are doing business with you or your customers. You need those contracts. You need contractor agreements, if you're hiring people to do work for you. Employee contracts, if you're going to hire people to help you with your business, you might need, like I said, lease agreements. So contracts are the number one thing that you're going to need if you're starting an LLC.
#2 – Local Permits and Licenses
Number two is licenses and permits. I need a license to practice law. I need a privileged license to do business within the Town of Cary. You might need other local ordinances. This is just for North Carolina, if you live in a different state, a different town, different county, you may need different licenses as well. And so that's the second thing you're going to need is some sort of licenses, privilege license, occupational license, things like that. That's number two.
#3 – Form SS-4 to Obtain an EIN Number
Number three, you need a form SS-4. This is to apply for your federal tax ID number. If you want to have a bank account for your LLC, you need to have a form SS-4, you need to have an employer identification number to open up that bank account, to open up lines of credit to do all sorts of things that you might do on behalf of the business. You're going to need an employer identification number to file taxes at the end of the year, you're going to need that as well. So that is the next thing.
#4 – Form 2553 for S-Corporation Election
That's followed closely by a form 2553. That is your S corporation election. I'm going to link up a video on S corporation elections. Those you'll need to do if you're choosing an S corporation, you don't have to do that. Now, when I say that, I mean, S election status for purposes of filing taxes.
#5 – Insurance
Insurance. You're going to need a general liability policy in all likelihood. Minimum is typically around a million dollars. If you've got a high, oh, so tired. If you have a higher risk business, you may need to up it for more than that. I just got a quote because this lease I'm just entering into, one of the requirements of this lease contract is that I get a million dollar of liability coverage. And I think it costs me like 200 or 300 bucks a year. It's nothing major, but that's something you're going to need.
#6 – Banking Resolution
The sixth thing that you're going to need the requirement. But it's a good idea is what's called an initial resolution or consent document. This is basically a document that says that you and any other members that are going to business with you are adapting. You know, basically you're going to adopt the operating agreement. You're going to elect S corporation status. And you're going to ratify that. You are going to maybe elect officers, all sorts of different things that you're going to do. This initial resolution basically says that you have the legal authority to do that. And so it's not required, but it's a good idea to have.
#7 – Operating Agreement
Which leads us to the seventh document that you're going to need. And as an operating agreement, every LLC needs an operating agreement. It doesn't matter if you're a single member LLC, a multi-member LLC, a member-managed LLC, a manager-managed LLC, anything like that, you're going to need an operating agreement. The operating agreement is what governs the LLC, how it's going to do business. How are you going to take distribution? Who's going to be the officers. What are you going to have? What's going to happen, if you dissolve the LLC, what type of tax status you're going to have. All those different things are part of the operating agreement. You're going to want to make sure you get one of those.
#8 – Articles of Organization
And last but not least, the final document you're going to need is called articles of organization. And this is the document that you're going to file with the Secretary of State's office in your state to, to basically form your LLC. If you don't do that, you don't have any LLC. So probably of all of these, these eight, that's the most important. And you're going to need that.
And that's it for today. If you like what I'm doing, please leave a comment below. Let me know what you think. Let me know how you're doing with your business. That's it for today!