You’ve filed your LLC paperwork with the state, but formation is just the legal starting point. The next steps, from getting your tax ID to opening a bank account to setting up your operating agreement, are what actually make your LLC functional and protected. Here’s what to do now, in roughly the order you should do it.
Get Your EIN From the IRS
An Employer Identification Number is a nine-digit number the IRS assigns to your business. Think of it as a Social Security number for your LLC. You’ll need it to open a bank account, file taxes, and hire employees. Even single-member LLCs with no employees benefit from having one, since it lets you keep your personal Social Security number off business paperwork.
The fastest way to get an EIN is to apply online at IRS.gov. It’s free, and you’ll receive your number immediately at the end of the application. You can also fax Form SS-4 and get your EIN back in about four business days, or mail the same form and wait roughly four weeks. There’s no reason to pay a third-party service for this.
During the application, the IRS will ask you to name a “responsible party,” the person who controls the entity and its assets. You’ll provide that person’s name, Social Security number, and signature. One formatting detail worth knowing: the IRS system only accepts letters, numbers, hyphens, and ampersands in business names. If your LLC name includes symbols like periods or slashes, you’ll need to spell them out or substitute a hyphen.
Write Your Operating Agreement
An operating agreement is the internal document that spells out how your LLC runs. It covers who owns what percentage, how profits and losses are divided, what each member’s responsibilities are, how votes work, and what happens if someone wants to leave or passes away. Even if your state doesn’t legally require one, you need it.
Without an operating agreement, your LLC defaults to whatever rules your state has written into its LLC statute. Those default rules are generic and almost certainly don’t match what you and your co-owners actually agreed to. For single-member LLCs, the operating agreement still matters because it reinforces the separation between you and your business. If that line gets blurry, a court could “pierce the veil” and hold you personally liable for business debts, which defeats the entire purpose of forming an LLC.
Your operating agreement should include at minimum:
- Ownership percentages for each member
- Profit and loss distribution (this doesn’t have to match ownership percentages)
- Voting rights and how major decisions get made
- Management structure, whether members manage the company directly or appoint a manager
- Buyout and transfer rules covering what happens if a member wants to sell their interest, gets divorced, or dies
- Dissolution procedures for winding down the business
If you have partners, this is the single most important document you’ll create. Get it in writing before money starts flowing, not after a disagreement forces the issue.
Open a Business Bank Account
Mixing personal and business money is one of the fastest ways to undermine your LLC’s liability protection. A dedicated business bank account creates a clear paper trail showing that your LLC operates as a separate entity.
You can open a business checking account online or at a local branch once you have your EIN. Banks typically ask for:
- Your EIN (or Social Security number for single-member LLCs taxed as sole proprietorships)
- Your LLC’s formation documents (articles of organization or certificate of formation)
- Your operating agreement
- Any business licenses you’ve obtained
Shop around before choosing a bank. Compare monthly fees, minimum balance requirements, transaction limits, and whether the bank offers integrated payment processing or bookkeeping tools. Some banks waive monthly fees if you maintain a minimum balance, and several online banks offer free business checking with no minimums at all. Once the account is open, run all business income and expenses through it. Pay yourself a distribution or salary from the business account to your personal account rather than spending business funds directly on personal expenses.
Choose Your Tax Classification
An LLC is a legal structure, not a tax classification. The IRS lets you choose how your LLC gets taxed, and the default depends on how many members you have. A single-member LLC is taxed as a sole proprietorship by default, meaning all profits flow through to your personal tax return on Schedule C. A multi-member LLC is taxed as a partnership by default, with profits passing through to each member’s return based on their share.
You can also elect to have your LLC taxed as an S corporation or C corporation by filing the appropriate form with the IRS. S corp taxation can save you money on self-employment taxes once your business is earning enough to justify paying yourself a reasonable salary, with the remaining profits distributed without the 15.3% self-employment tax. This typically starts making financial sense when your net profits are consistently above $40,000 to $50,000 per year, though the exact threshold depends on your situation. To elect S corp status, you file Form 2553 with the IRS, generally within 75 days of the start of the tax year you want the election to take effect.
Check for Licenses and Permits
Forming an LLC doesn’t automatically give you permission to operate. Depending on your industry and location, you may need additional licenses or permits at the federal, state, or local level.
At the local level, check whether your city or county requires a general business license or a home occupation permit if you’re working from home. Zoning laws may restrict certain types of businesses in residential areas. At the state level, many professions require specific licenses: think construction contractors, accountants, cosmetologists, real estate agents, healthcare providers, and food service businesses. If you’re selling physical goods, you’ll likely need a sales tax permit from your state’s department of revenue. Businesses that serve alcohol, handle firearms, or have environmental impacts face additional regulatory requirements.
Start with your state’s secretary of state website and your city or county clerk’s office. Both typically maintain checklists or searchable databases of required permits.
Set Up Your Accounting System
You don’t need an expensive setup, but you do need a system from day one. Reconstructing a year’s worth of transactions at tax time is painful and error-prone.
At minimum, track every dollar coming in and going out of the business, categorized by type (supplies, advertising, travel, etc.). Software like QuickBooks, Wave (which is free), or FreshBooks can automate much of this by connecting to your business bank account and credit card. If your business is simple enough, a well-organized spreadsheet works too. Save receipts for every business expense. Digital copies are fine.
Decide early whether you’ll use cash-basis or accrual-basis accounting. Cash basis records income when you receive payment and expenses when you pay them, which is simpler and works well for most small LLCs. Accrual basis records income when it’s earned and expenses when they’re incurred, regardless of when money changes hands. Most small businesses start with cash basis.
Understand Your Ongoing State Requirements
Your LLC isn’t a file-and-forget entity. Most states require you to file an annual or biennial report with the secretary of state, updating your business address, registered agent, and member or manager information. Filing fees vary widely by state, from as low as $0 to several hundred dollars. Missing the deadline can trigger late fees, and some states will administratively dissolve your LLC if you fall too far behind.
Many states also impose an annual franchise tax or LLC fee on top of the report filing. This is separate from income taxes and is simply the cost of maintaining your LLC in good standing. Mark these deadlines on your calendar now. Your state’s secretary of state office will typically send a reminder, but don’t rely on it.
You’ll also need to maintain a registered agent, the person or service designated to receive legal documents on behalf of your LLC. If you listed yourself as the registered agent during formation, that’s fine as long as you’re available at the listed address during business hours. If that becomes impractical, registered agent services typically cost $50 to $300 per year.
Get Business Insurance
Your LLC limits your personal liability, but it doesn’t protect the business itself from lawsuits, property damage, or other claims. General liability insurance covers common risks like customer injuries, property damage, and advertising claims. If you provide professional services or advice, professional liability insurance (also called errors and omissions coverage) protects against claims of negligence or mistakes in your work.
If you hire employees, most states require workers’ compensation insurance. Even if you’re a solo operation, some clients and contracts will require you to carry certain coverage before they’ll work with you. Get quotes from multiple insurers, and consider working with a broker who specializes in small business coverage to find the right policies for your industry.
Build Your Business Presence
With the legal and financial foundation in place, turn your attention to the operational basics. Register a domain name that matches or closely reflects your LLC name. Set up a professional email address using that domain rather than a free email provider. If your business serves local customers, create a Google Business Profile so you appear in local search results and on Google Maps.
If you plan to hire contractors, set up a system for issuing 1099 forms (tax forms reporting payments you make to non-employees). You’ll need each contractor to fill out a W-9 before you pay them, which gives you the tax ID you’ll need for reporting. Keep these on file from the start rather than chasing them down at year-end.