Over the course of my career, I’ve helped over hundreds of thousands of small business owners incorporate a business or form and LLC. And certainly there are many questions leading up to the process, such as, What type of business should I form? What’s the difference between an S Corp and a C Corp? But I’ve also found there can be just as many questions after incorporating a business or forming an LLC.
I’ve put together some of the more commonly asked questions to help you navigate life after the incorporation or LLC formation process:
I used to be a sole proprietor and I had a Federal Tax ID number. Do I need to get a new Federal Tax ID number now that I’ve incorporated/formed an LLC?
The answer here is yes. An LLC or corporation is its own separate entity (remember, an LLC or corporation can sue, be sued, get a loan…) and as such, it needs its own Federal Tax ID number, also known as an Employer Identification Number (EIN). Think of business formation like the birth of a child. Once a child is born, it needs its own Social Security number. The same holds true for your business.
As a sole proprietor, you’re able to identify your business with either your Social Security number or an EIN. However, if you’re operating your business as an S Corporation, LLC, C Corporation or other legal entity, you must obtain an EIN for that entity. Otherwise, you will not be able to open up a business bank account or file your business tax returns properly.
After I incorporate or form my LLC, what happens to my sole proprietorship?
This question needs to be answered on two fronts:
- From a tax perspective: you should consult your accountant/CPA about when is the best time to close the books on your sole proprietorship and open them on your corporation/LLC. This decision can have some pretty hefty tax implications and some professional advice can go a long way.
- From an entity standpoint: if you form the corporation/LLC under the same name as your sole proprietorship, you can start conducting business under the corporation or LLC. In this case, you can either cancel the DBA (Doing Business As) that you had set up with your sole proprietorship, or just let it lapse.
If I have a bank account as a sole proprietor, can I convert it to the corporation or LLC, or do I need to open up a new bank account?
No, you will need to close the books on your sole proprietorship (again, remember to check with your CPA/accountant on the best time to do so) and then open a new bank account under the corporation or LLC.
Once I form a corporation or LLC, is my name automatically protected in all 50 states?
No. Your name is not automatically protected in all 50 states upon the formation of your corporation or LLC in one state; you are merely preventing another from filing as a corporation or LLC in that same state.
What you are inquiring about is trademark protection. You’re not actually required by law to register a trademark. Use of a name instantly gives you common-law rights as an owner, even without formal registration. However, you should consider trademarking your name for proper legal protection — after all, you’ve spent untold hours deliberating on the ideal name, and you’ll be spending even more cultivating brand recognition. Trademarks registered with the U.S. Patent and Trademark Office (USPTO) enjoy significantly stronger protection than common-law (unregistered) marks. In a future post, I’ll discuss the topic of protecting your business name and brand in more detail.
If I am doing business under multiple names, are all my names, including my website, protected under my newly formed corporation or LLC?
If, like most businesses, you’re going to be operating under any variation of your official company name (i.e. CorpNet vs. CorpNet.com vs. CorpNet, Inc…), you will need to file DBAs for each of the variations. You should have your corporation/LLC file the DBAs so they operate under your corporation/LLC.
The same holds true even if you’re going to operate multiple ventures (for example selling handmade soaps, knitwear, jewelry…) under the same company. You can establish one main company (i.e. Susy’s Corp) and then have Susy’s Corp file multiple DBAs for each of the specialized brands (i.e. Susy’s Soaps, Susy’s Knits…). This way each of the smaller companies can reflect the branding and presence best for their specific markets, yet still enjoy the legal protection of the main holding company.
Do I need to do anything else to keep my LLC/Corporation in good standing?
I’m going to address this issue in detail in my next post, but the short answer is yes … your work isn’t entirely done after you submit that initial paperwork. For both the LLC and corporation, you’ll need to file an Annual Report (requirements vary by state). In addition, you’ll have to stay on top of any major changes (for example, did you authorize more shares? Did a board member leave?) by filing Articles of Amendment. Stay tuned for my next post to learn more about how to keep your LLC or corporation compliant.
More in: Legal Structure
I just incorporated this year and this is some great information. I look forward to your upcoming posts.
Robert – thank you for your kind words! Congrats on incorporating! 🙂 – Nellie
Thanks for sharing! I’m glad to see the incorporating. It’s a pain, but i’ve done mine in Delaware for the obvious benefits.
I have a tax id number to start my small business what do I do next?
I have the same question…Did you get a response
Hi Bettina – Is it a state or federal tax Id? And what type of a business entity are you currently conducting your business under? Do you have a DBA for the business? Are you’re a corp or an LLC? Next steps would be to open up a bank account as long as you have the legal docs and are set up as some sort of a legal business entity…let us know and we can help guide you Thx! – Nellie
I just opened a business bank account under my LLC, after looking at my banks paperwork, I noticed my social an DL# on there. I didn’t want that info on there. I thought I just needed my EIN# an docuements from my LLC to protect my personal info from being on this bank account. Did the bank need that info? Any help on this matter will be greatly appreciated.
Hi Raul – Right now it seems your EIN is under your personal name and that is why it shows your name, your DL and your SS#. You need to apply for a Federal Tax ID aka an EIN under the LLC and then take that EIN and your LLC filed docs to the bank and open up the bank account under the LLC. I hope that helps!! – Nellie
I have Fed ID # for my Fictitious Name. In 2007 I had gotten incorporated but never moved all my business information over to the Incorporation. The inc. has its own Fed ID#. Can I put my Fictitious Name under my S Corporation and still use the 2 different Fed ID#???
Hi Christa –
You cannot have 2 FED ID #’s for your corporation; the corporation fed tax ID # is the one you should be conducting under since that will provide you with the most liability protection. You cannot just transfer the fictitious business name to your corporation and under your corporation; however, what you can do is have the corporation file a fictitious business name filing and do business under the fictitious business name that you have been conducting under prior to becoming incorporated. Make sense?
Corpnet.com. my company would be more than happy to go over the process and this filing process with you and assist you with this filing. Please feel free to reach out to me and I can go over the filing process and what is required with you.
Thank you for this article. I have an LLC that runs an online furniture business. I also have other websites in unrelated markets. On the other websites on my “About Us” page, if I clearly state that the website is owned and operated by the furniture company, do I need DBA’s for those?
Thanks for the information. I just heard about a book on this topic that is coming out soon. I am thinking about ordering it. Have you heard about it or know if the author is any good? Any other recommendations?
Hi Jeff – thanks for reading my article, generally speaking, the LLC must file the DBA under the umbrella of the LLC in order for the other companies and DBA’s to be protected under the LLC. Please let me know if this makes sense to you and reach out with any further questions! – Nellie
Hi Cris – yes, she is my dear friend and the name of the book is: You’ve gotta a business, Now what? By Debbie Morgan! 🙂 Thanks! -Nellie
after llc, after ein, what other docs do i need? i will open checking acct, do i neeed a duns #
Hi Jacqueline – In order to open the bank account, you need the LLC Filed article of organization, your operating agreement for most banks and the EIN to open up the bank account; also if you will be doing business under any other name, you will need to have the fictitious business name filings under the LLC for the name variations as well; you do need a DUNS # for the business but not for opening a bank account. Thank you for reading my post! – Nellie
Hey Nellie , look like you are a great help to lots of people like me , my question is im from India i have form a LL C under my name with EIN , now im struggling to open a bank account since i don’t have a ssn , would you email me in regards to this issues …. Thanks
Hi Mario – In order to obtain a Tax ID in the US, you are not required to have a SS#; all you are required to have is a US address and if you have that we can obtain the number for you for a minial service fee. Please call our office at 1-888-449-2638 and ask for Milton Turcios at Ext. 104 and he can assist you with this filing. Thank you! – Nellie
I have filed for my S-corp, and plan on using a DBA, can my checking account be in the name of the corporation, or does it have to be in the name of the DBA (same name with out the inc. at the end). My bank said I can only open a checking account with a DBA, and not with a s-corp without a DBA.
I have been Incorporated for 2 years has my business accrued enough credit to open a bank account? What can I apply for in terms of state assistance? TY
Hi Jessica – Thank you for reading my post and commenting! I suggest you consult your local bank as that is where you can consider applying for business credit. Hope that helps! – Nellie
If I have a S corp with a LLC under it do I need to get a different EIN # for that LLC?
S corp has all the funds but I would like to do the business under the LLC. Is this ok?
How should I handle this in a real estate investing business?
Hi there! If one has an S corp with an LLC under it, one generally does need to obtain a Tax ID for the LLC as each entity is separate from one another. With respect to your other inquiries, I would recommend you to talk with your CPA or accountant.
Hello i incorporated 1 and half years ago, but I have did nothing else because i do not understand. I incorporated thru Legal Zoom not knowing the difference between llc or corporation. Now that I paid my money I feel stuck and confused on whats next..
Sorry for the late response! The requirements vary from state to state. Please feel free to call my office for a free business consultation and one of our representatives will be happy to outline the next steps for you! 888-449-2638
I just filed for my llc. It is just me for my freelance makeup. do i need to get an EIN or separate tax id? can i use my social? if i use my info does that screw up my taxes? did i even do the right thing? sounds like i should have done an s corp. please help!
Generally an LLC is required to have a separate Tax ID number. This keeps the LLC a separate entity from the individual. If you need assistance in obtaining your Tax ID or have any further questions, please feel free to call my office for a free business consultation at 888-449-2638. Ask for Katie Hendrix.
Savvy blog post – I Appreciate the facts ! Does someone know where I would be able to grab a blank a form form to type on ?
Just got a tax ID for a business I like to start up and kind of wanted to know how to establish business credit. I just have a tax ID also don’t know what else to get next.
My husband just converted from sole proprietor to smllc. Until he gets all of his accounts payable switched over he is still receiving payments under his ss# and not his ein#. Will this be a conflict of interest or is it acceptable. Does it matter if his 1099’s are under his dba or his new ein?
Thank you for your question. I would recommend speaking with an accountant or CPA in regards to this matter, as they would best be able to advise you on what to do in this situation.
Hello I just got incorporated last month I opened a s-corp for my electrical company. What are the next steps I have received my bylaws folder etc. but I am very new to this, Can you help me with what steps I should be doing now thanks in advance.
Thanks so much for reading and commenting. Generally, the next steps once the business has been formed is to open a bank account and find out if you need any licenses or permit. My company is more than happy to assist in determining if any licenses or permits are required or obtaining those licenses if you already know what is required. Please feel free to reach out to us at (888) 449-2638 or info at corpnet dot com with your business name and we will direct you to your dedicated account representative for further assistance. Thanks again and we look forward to hearing from you soon!