CEO and Founder CorpNet
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5 Things Your Clients Should Do After Incorporating

Feb 21st 2018
CEO and Founder CorpNet
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Whether they’re a brand new business or have created an official business entity after operating as a sole proprietor, incorporating in any form is a major step for your small business clients.

In fact, it is likely they are wondering “what now?” after filing their registration paperwork with the state. So how can you help them sort through that?

Here’s a checklist of tasks clients should tackle after their corporation or LLC is approved:

1. Obtain an Employer Identification Number (EIN) from the IRS

LLCs, corporations, and partnerships must have an EIN. Without an EIN for their company, they won’t be able to open a business bank account, file their business tax documents, or hire employees. Note that a business owner who got an EIN when operating as a sole proprietor will need to apply for a new federal ID number for the new business entity. EINs are not transferable.

2. Apply for Any Required Business Licenses and Permits

Depending on the type of business activity your clients conduct, they may need to obtain licenses and permits to legally operate in their state and local jurisdictions. Requirements vary from state to state, county to county, and town to town, so business owners should research the rules at the state and local levels. If a company operates without the mandatory licenses and permits, it could get hit with fines or even be forced to shut down the business altogether. 

3. Open a Business Bank Account

After obtaining an EIN, your clients will be able to open a business bank account. This is critical for keeping company funds and transactions separate from the owner’s personal finances.

A business bank account will enable your clients to accept checks from customers and issue payments in their company’s name. Clients who operated as sole proprietors before must close their previous business bank account and open a new one under the LLC or corporation.

4. Take Care of Additional Business Name To-Do's

If your clients want to do business under a name other than their official company name, they will need to file for state approval to use a fictitious name (known also as a “DBA” or “doing business as). For instance, if the registered business name is “ABC Consulting Associates, Inc.” but your client wants to use a less formal name like “ABC Consulting” in its marketing materials, a DBA filing would be necessary for that alternate name. 

Your clients may also want to consider protecting their business name in all 50 states by filing for trademark registration with the United States Patent and Trademark Office (USPTO). While forming a corporation or LLC protects a business name within its state of registration, a trademark will safeguard the business name throughout the U.S. It’s best to do a trademark search to make sure no other businesses have already claimed the name as a trademark.

5. Learn What it Will Take to Stay Compliant

To maintain a status of good standing with the state, your clients must make sure they meet all of the ongoing business compliance obligations that apply to them. What they will need to pay attention to will depend on the legal structure of their company and where they are operating their business.

The compliance requirements vary from state to state (and sometimes from one county or municipality to another), so it’s important for clients to review the Secretary of State’s and local government’s requirements to make sure they understand their responsibilities and deadlines. Failure to stay compliant can wreak havoc on a business and its owners— clients could lose their personal liability protection, be subject to fines and penalties, or even be forced to close their company.

Where Clients Can Turn for Additional Information and Support

In addition to your guidance from a financial and tax perspective, as your clients work through the business startup process they can also benefit from seeking legal advice from a business attorney. There are many moving parts and navigating it all can become confusing and frustrating without the support of professional expertise.

In order to save time and money when taking care of the required business paperwork, your clients may also consider enlisting the help of an online business document filing service that can ensure their forms are completed accurately and submitted on time to the appropriate government agencies.

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Accountant, CPA
By borntoreconcile
Mar 5th 2018 03:52

6. Check with your tax professional to see if you should make an entity election, such as for an S-Corp on form 2553 or tax classification on form 8832. There is a time limit on the S- election, so don’t let it slip by.

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