How To Maintain an LLC
By Bazal Razzaq
Updated: June 19, 2023, 12:30pm
Editorial Note: We earn a commission if you use the services recommended on this page. Commissions do not affect our opinions or recommendations.
Things To Do After Setting Up An LLC
Maintaining a successful Limited Liability Company(LLC) needs more than just setting it up and letting it run on autopilot. If you’ve read our guide on maintaining an LLC, you may already know what LLC maintenance is, why it matters so much, and how to do it effectively after setting up an LLC.
Much like any other business entity, an LLC needs proper attention and effort to function properly and remain legally compliant. Doing so will let you keep enjoying the many benefits of an LLC, like personal liability protection and tax flexibility.
Facing difficulties managing and maintaining your LLC the right way? Like always, we’re at your aid! We list four tips and tricks below for maintaining an LLC, so you can avoid taking shaky chances!
Four Things To Do After Setting Up An LLC
The #1 trick to maintaining your LLC is keeping it all organized and under control. Only a fool for an entrepreneur waits for things to go wrong to fix them. Sound a bit harsh, right? Well, it should!
The “don’t fix it if it’s not broken” strategy doesn’t work here, especially when you’ve got a lot of paperwork, documents, licenses, and other such obligations lying everywhere.
In situations like these, proper maintenance will be a losing battle. Why are we being so rude and persistent about it? Because in cases of a lawsuit, tax audits, bankruptcy, and similar situations where your business assets are at risk, you’ll need to prove that your LLC is a formal business to the IRS or the courts.
If you fail to prove that your LLC is a real company and not just some slush funding source or a tax loophole, you may miss out on the multiple benefits of an LLC. Keep accurate and organized financial, legal, and business document records to avoid this.
To give you an idea of what we’re talking down, here’s a list of some paperwork your main office/place of business should have,
- LLC Articles of Organization(Certificate of Formation)
- LLC Operating Agreement
- A list of all the LLC members/owners, their contact details, addresses, contributions, and shares
- EIN confirmation letter
- LLC Meeting minutes( if mentioned in the operating agreement)
- Financial statements and tax records
- Business licenses and permits
You need to maintain an organized system to store financial records, tax documents, contracts, and other important paperwork. You can store them properly at your physical office and keep them backed up online in the cloud storage for safety.
Also, regularly updating your books will help you better track your income, expenses, assets, and liabilities. Doing so will make your tax preparations, financial analysis, and decision-making processes much easier.
As an entrepreneur, it’s extremely important to stay updated and informed about the ever-changing market trends and conditions and changes in laws and regulations that could affect the state of your LLC.
You should invest time in professional development by attending seminars, relevant workshops, and industry conferences. One is never too smart for growth, and when you’re an LLC owner, continually growing and adapting is your best bet!
You can join trade associations and networking groups to socialize and connect with peer groups, which will ultimately help you gain helpful insights.
Finally, you can’t do it all by yourself. When facing complicated legal, financial, or operational difficulties, don’t hesitate to seek advice from qualified experts such as attorneys, accountants, or other business consultants who specialize in supporting LLCs.
Featured Best LLC Services
On Northwest Registered Agent’ Website
On IncFile’ Website
On Business Rocket’ Website
By now, you’d have a good idea that every LLC in the United States needs a Registered Agent to receive important legal and otherwise documentation like annual renewal forms and service notices for your business. A person or an entity must be authorized to receive these government ordinances, tax forms, and lawsuit notices. Having this service can solve most of your LLC maintenance woes.
Technically, you can be your own registered agent, but we strongly recommend against that. Why? Because if you’re using a registered agent service, you’ll benefit much more from the basics. Still confused?
Simply put, a registered agent service will help your LLC remain compliant, making sure that all your paperwork and documentation are current with federal, state, and local laws. They’re professionals who might have pre-filled state forms to handle all your paperwork.
Some services will even remind you of upcoming renewals and submission deadlines. This feature especially comes in handy as some states can go as far as to fine you if you fail to send in your annual reports, file your annual taxes, and pay the required fees.
A registered agent service can help you maintain your LLC much more easily, especially when compared to doing things the traditional route.
For our last tip, we’ll highlight the most overlooked and undiscussed point that ties all the loose threads together. Yes, communication! Even the most basic of your LLC activities and decisions can’t be carried through without communication.
Effective communication is important for your LLC maintenance. Probably, the most important. Why? Because fostering a culture of open dialogue, feedback, and collaboration promotes a positive work environment and enhances operational efficiency.
As a business owner, you should get in touch with all your stakeholders, including members, partners, employees, vendors, and customers, weekly- or monthly. Address any minor or major problems or issues transparently, always focusing on finding a solution.
You can set clear and thorough internal policies and guidelines, making sure that there are consistent communication channels within your LLC.
As mentioned throughout our website, the specific requirements of LLC maintenance will depend on your state. The best thing to do is get in touch with a business attorney, a tax consultant, or an accountant to address any questions, problems, or concerns you need to address.
These quick tricks will help you set a strong foundation for your LLC’s success and ensure its compliance and continued growth.
Lastly, always keep in mind that LLC maintenance needs consistent love and admiration for the company, the zeal and wisdom needed to push through the industry’s challenges, and enough dedication and commitment to keep it running throughout the ups and downs of life.
Frequently Asked Questions
While many states don’t ask for an operating agreement. It’d be in your best interest to get one drafted. Since an operating agreement outlines your LLC’s basic rights, responsibilities, and ownership structure, it can be helpful in case of any misunderstandings or fights between the members/owners.
Yes, it’s possible to change the ownership structure of your LLC through a process called “membership interest transfer.” It typically involves making a few changes in your operating agreement and informing the concerned authorities of the amendments.
The short answer- both. While it’s not mandatory to seek legal or accounting assistance, it sure can be helpful to consult attorneys or accountants specializing in business law and taxation. They can help you with compliance, advise on legal troubles, and assist with tax planning, overall helping you maintain your LLC effectively.