New Business To Do List-- A Checklist for After You have Formed a Business Entity
Volume 5 • Issue 8 • August 2015
The Counselor is a monthly newsletter of Hallock & Hallock dedicated to providing useful information on estate planning, business succession planning and charitable planning issues. This month’s issue is a “To Do List” for those who have formed a business entity. If you are interested in learning more about the ideas and processes discussed in this newsletter, please contact us for an initial consultation.
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 tax identification number.
- 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.
- Office telephones should be listed and answered in the name of the new entity.
- Exterior and interior office signs should show the name of the new entity. The Company name should also be shown on any building directories.
- Leases for office and/or equipment should be assigned to the entity, if possible. New lease should be prepared in the name of the entity.
- Clients 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 or redrafted 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 if required.
Whether you formed your business entity for succession planning, tax planning, asset protection planning or all of the above 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.