Last week I shared about my process to register a LLC, and this week I will cover three more steps to take once you are officially a business owner. These will allow you to do financial transactions, and they are super easy. This is advice for those living in the United States. Unfortunately, I have no experience with running a business in another country…yet.
1. Register A Fictitious Name
A Fictitious Name is an extra name your company uses legally. This is most common if you are using a pen name and would like to be paid by that name. For example, if your company is Ella Minnow Pea Novels LLC, you may want to register a Fictitious Name of Ella Minnow Pea. Fictitious Names are strictly optional and not required. It’s just something to consider.
You do this on the Secretary of State’s website, just like you did with the LLC. The process is very simple, but there is one thing you do not want to mess up. It will ask if you are filing as an individual or an organization. Pick organization and put your LLC’s name in the blank. If you file as an individual, you are creating a link to you personally, which will open you up to lawsuits. It basically voids the whole point of creating a LLC. So, file as an organization!
2. Apply For An Employer ID Number
An Employer ID Number (EIN) is a number that the IRS will assign to your business for tax purposes. Getting an EIN is simple. Go to irs.gov and click on the “Apply for an Employer ID Number (EIN)” link. You will have to read some terms and then apply.
Select your type as “Limited Liability Company (LLC)” and hit continue. You’ll need to number how many members are in the LLC (one, if it’s just you) and in what state you registered the LLC. Your reason for applying for an EIN is you started a business, and then you will need to give your name, SSN, and address. Lastly, it will ask for your company information. Once you have that all completed, you can review your details and then pay to file.
A word of warning, you cannot edit a section once you pass it. I got to the end and saw a typo, but I had to restart the application process to fix it. So pay close attention, or you’ll be doing it twice!
3. Open A Business Checking Account
I know this seems obvious, but it can be overlooked sometimes. Do some research on which banks have the best offers for businesses. I set up an account at the bank I use for my personal accounts to make it easier on me.
The bank will need your LLC paperwork: Articles of Organization, Certificate of Organization, and Operating Agreement. They will also ask to see the IRS print out of your EIN number to link to the account. Of course, you’ll need a government issued photo ID as well. You may want to contact the bank you decide to use and make sure they do not require anything else. I suggest you take at least one other person with you to open the bank account so someone else’s name is on it (in case something happens to you).
The process at my bank was pretty painless. I elected to open a free business checking account instead of the paid one (can you blame me? I’m not getting paid yet!). They asked to see my business paperwork, and I had to sign my name a few times. Don’t forget to purchase some checks as well. You will need them to pay others if you can’t use your debit card, and it’s also how you’ll reimburse yourself when you have to pay out of pocket for something.
C Corp Or S Corp
There was only one thing that confused me when I set up my checking account. The banker asked if I wanted to be a C Corp or a S Corp. Now, I still don’t fully understand what these are, but it has to do with how your taxes will be filed. I suggest you do some research or ask a tax accountant for advice on this before setting up the account.
As I already stated, I know a few people who own LLC companies, and I made a quick phone call to get my answer. The best way I can describe it (which may be wrong so don’t quote me) is that a C Corp is a standard corporation and a S Corp is something special for more sophisticated companies with tax privileges. I chose to be a C Corp, which is what I believe most people do. But again, do your own research on the subject.
Final Thoughts
Once you have an EIN and a business checking account (and a Fictitious Name if you want one), you’re ready to do business as your new LLC. Congratulations! Now, go and make some money. Or just spend it. Whichever makes you happier.
Thanks for reading!
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