6 Legal Must-Dos After Incorporating A Business

In my previous article, I outlined the key details for helping your clients incorporate their businesses. Whether you incorporate or form an LLC, creating a formal business structure is a huge milestone for any small business. However, legal obligations aren’t done once you file the incorporation/LLC paperwork.

Many small business owners wonder what comes next after they’ve formed a corporation or LLC. To help answer that question, here are the top six steps for any newly filed corporation or LLC:

Get an EIN
Whenever a new business forms, it will need to register with the IRS by applying for an EIN (Employer Identification Number). If your client already had an EIN as a sole proprietorship, they will most likely need to apply for a brand new EIN for the LLC or corporation. You can review the criteria and apply for an EIN on the IRS website.
Apply for any necessary business licenses
Incorporating or forming an LLC gives a business a solid legal foundation, but you also need to consider any local licenses or permits. These are similar to a driver’s license… they give a business permission to operate. Permits are typically given at the city or county level and include professional licenses, reseller’s permits, zoning licenses, and health department permits. If you’re not sure where to start, you can contact your local office or a site like BusinessLicenses.com.
Open a new business bank account
Once your client has their EIN, they can now apply for a business bank account. If they already had a business bank account as a sole proprietorship, they will most likely need to close that account and open a new one with the new LLC/corporation name and EIN number. As you know, keeping a strict line between personal and business accounts helps streamline the business’ recordkeeping. In addition, corporations and LLCs are legally required to maintain their own books – there can’t be any commingling between the finances of the business and the personal finances of the business owner.
File DBAs if needed
Whenever a business uses a different variation of its official name (the name filed in the LLC/incorporation formation paperwork), it needs to file a Doing Business As (DBA) with the state or county. This essentially lets the public know who is behind any business name and it’s needed no matter how small the name variation is. You can file a DBA with the state or county clerk, or have an online legal filing service handle it for you. A public notice of the Fictitious Name (the DBA) – such as listing in a local newspaper- is typically required with the application.
Understand the compliance requirements
Running and LLC or corporation is more involved than running a sole proprietorship. Annual reports and ongoing recordkeeping are required to maintain a corporation or LLC and keep it in good standing. You can help your clients know their compliance requirements – or help them file it. Examples of compliance paperwork include: Initial Report/Annual Report, Operating Agreement/bylaws, Annual Meeting, and meeting minutes.
Protect the name with a trademark

Forming a corporation or LLC provides some level of brand protection: no other company can form an LLC or corporation in the same state. However, there’s nothing to stop another business from operating as a sole proprietorship or partnership in that state – and forming a corporation won’t stop other companies from using the name in the other 49 states either. For this reason, if your client is concerned about protecting their brand in all 50 states, they should file for federal trademark protection.

If you or your client chooses to apply for a trademark, it’s smart to determine the availability of the name beforehand. That’s because if the name should conflict with an existing mark, the application will be rejected and the application fee will be lost. Conduct a basic search first to see if anyone has a pending application with the USPTO for the mark in a similar capacity. If the results of that search are clear, then run a comprehensive name search to see if anyone is using the proposed name at the state or county level.

The bottom line is when you form an LLC or corporation, it marks the beginning of a brand new company in the eyes of the law – even if that business has already been existing for years as a sole proprietorship or partnership. Be sure to help your clients navigate the next steps to create a strong legal foundation for the years ahead.