The “New” Business To Do List
Congratulations, you have been a sole proprietor for years, but on the advice of your attorney, accountant, and financial advisor you just formed a new limited liability company and received a shiny binder filled with documents. If this is you, regardless of the type of entity you just formed – LLC, corporation or otherwise, here are several items that you will want to consider following the formation of a new business:
The entity should obtain its own federal tax identification number.
The entity should obtain any other state or federal identification numbers, licenses, or permits.
The entity should obtain the necessary city and/or county business license from the city and/or county in which you do business. Even if you have obtained a business license in the past, many require a new license when you change the business form.
Letterhead, business cards, billing statements, and other stationery items should be printed in the name of the new entity.
New bank accounts should be opened in the name of the entity.
Company telephones should be listed and answered in the name of the new entity.
Exterior and interior signs should show the name of the new entity.
Leases for land and/or equipment should be assigned to the entity, if possible. New lease should be prepared in the name of the entity.
Customers and others should be instructed to make checks payable to the entity as opposed to being payable to you. If checks are received which are payable to you individually, you should endorse the checks to the entity.
Service contracts should be transferred to the entity or re-drafted in the name of the entity following organization.
Employees should be hired/re-hired by the entity.
A clear policy should be adopted by the entity as to which ordinary and necessary business expenses of the owner/employees will be reimbursed and appropriate records should be kept.
Insurance policies should be obtained in the name of the entity or transferred to the entity. In certain cases you should continue to be listed as an additional insured. Premiums should be paid by the entity.
Contact your Worker’s Compensation insurance carrier to let them know of your changed business status or if you do not already have such insurance you should contact a reputable insurance carrier and obtain such insurance where required.
Contact the appropriate state agency about establishing unemployment insurance for the entity, if required.
Brands, permits, FSA Contracts and similar items should be transferred to the new entity.
Where appropriate, real and personal property should be transferred into the name of the new entity.
It is important to remember to treat the business as a business and honor its distinct nature. If you do so, you will receive all of the benefits and protections afforded by the law. If you ignore these formalities, so will the courts. This list is not meant to be exhaustive and each business is unique. Therefore, it is important to work with your advisory team to ensure that these and any other items involved in your business are handled correctly.
This post is for informational purposes only and not for the purpose of providing legal advice. You should contact an attorney to obtain advice with respect to any particular issue or problem. Nothing herein creates an attorney-client relationship between Hallock & Hallock and the reader.