General Advice About Operating an LLC

ACTUALLY OPERATE BUSINESS THROUGH THE LLC - The business should actually be operated through the LLC.  All sales, leases, contracts, etc should be in the name of the LLC and not in the name of the LLC's owners (called the "members").  All of the business's receipts and payments should go through the LLC's bank account(s).

SEPARATE BANK ACCOUNT - It is important that there be a separate bank account opened in the name of the LLC. The business of the LLC must be kept legally distinct from the business of the owners ("members").   The members of the LLC should never directly pay debts owed by the LLC using a personal check or credit card. If the LLC needs money to pay a bill, the members can deposit their personal funds into the LLC's bank account so the LLC can then make the payment.

ADOPT AN OPERATING AGREEMENT.
  • LLCs are essentially partnerships that enjoy limited liability protection similar to a corporation except that partners are called "members" and the partnership agreement is called an "operating agreement".  If the LLC has more than one member a written operating agreement is recommended. It would govern such issues as management, split of profits, percentage of ownership, etc.

  • Even though a new LLC might have only one "member" it is still a good idea to have a written Operating Agreement.  Lenders and banks often expect to see an Operating Agreement when an LLC wants to open an account or take out a loan.
EMPLOYER IDENTIFICATION NUMBER (EIN) - The EIN is an official identification number for an entity designated by the IRS. You can apply for the EIN on-line (it's free). Go to the IRS website (irs.gov) and in the search bar at the top of the page type "EIN". After finding the link click it to go to the application page. Upon completion of the on-line application a PDF letter from the IRS is instantly generated by your computer stating what the EIN is (print it)

ANNUAL REPORT FILED WITH STATE - You will be required to file an "Annual Report" with State on yearly basis to maintain "active" status. The filing is done on-line through the state's Sunbiz.org website. The first such Annual Report must be filed between January 1st and May 1st of the year FOLLOWING the year that you first incorporated (mark this on you calendar since the State may or may not email a reminder to you). Along with the Annual Report you will be required to pay an annual fee of $138.75. If you file the Annual Report late the fee jumps to $400. If you don't file by mid September of that year your LLC will be "administratively dissolved" by the State.

TAXES - Taxes for an LLC can be tricky.  It is highly recommended that you consult with an accountant familiar with the taxation of LLCs.  CLICK HERE for an article on the taxation of LLCs

CORPORATE TRANSPARENCY ACT - Virtually every legal entity in the United States (with a handful of exceptions) MUST disclose information about it's owners, officers, and controlling persons.  The disclosures (called the Beneficial Ownership Information Report or BOIR) must be made to a federal agency known as the Financial Crimes Enforcement Network pursuant to the recently enacted Corporate Transparency Act.  Filing the report is free, it's easy and it can be done on line.  CLICK HERE for the link

EDUCATIONAL LINKS ABOUT LLCS