3 Important Documents You Need To Start Your Company
This post may contain affiliate links. Read the full disclosure here.
Starting a company is a great way to get into business while protecting your income and assets. But it takes a lot of preparation and documents to get started. Suppose you’ve been operating a growing sole proprietorship for some time.
In that case, it might be time to start thinking of protecting your assets, and you can do so by changing your business into a limited liability company. There are roughly 21.6 million such companies in the United States. If it’s something you’ve been considering, whether starting a new company or switching your business ownership, here are some important documents you will need.
Company name application form
Before filing any company formation documents, the first step is to select a name for your company and determine whether it is available. It might seem fairly easy, but you might be surprised to find out how difficult it is to find a name that’s not been taken.
However, you can run a quick search on an online database to be certain of your company name’s ability. Where your company would be situated can also influence its name. For example, in Utah, you will not be allowed to use the plural form of a word to separate your company from another.
Aside from that, all states have different rules on the types of names they would consider. Usually, offensive and other restricted words are generally not allowed. Once you’ve got your name, you can file to reserve it while working on any other company paperwork.
You will need a company agreement that spells out all the rules and policies regarding your company’s operation. This document needs to be fully read, understood, and agreed on by all members. It should also have clear details on how to distribute profits and how much each member should get based on the shares they own.
This document is not typically legally mandated but is still very important, especially for legal issues. A standard operating agreement should include the following areas: business name and registration, formation date, names of members and their roles, distribution of profits and losses, meeting schedules, and the procedures involved in adding or removing members.
Employer Identification Number
Your company must have an employer identification number as a registered entity. This nine-digit number gives your company a legal identity for tax purposes. You will also need it to open company bank accounts, apply for a business license, and file your company’s tax returns.
Getting a tax ID number can also provide you with more access to funding and loans, and you can hire employees and create an effective payroll system. When filling out other forms, you can also use this number instead of a Social Security Number.
It’s relatively easy to apply for your employer identification number. You can even apply online for a tax ID number for your LLC and receive it once your application goes through. You can also apply via mail or telephone, although that might take longer, especially if you’re in a time crunch.
Establishing a company is a major milestone. That’s why you must ensure that you have all the right documents to help give it a good start.
*This article is based on personal suggestions and/or experiences and is for informational purposes only. This should not be used as professional advice. Please consult a professional where applicable.