Creative entrepreneurs who don’t want to play small eventually take the step to form an LLC or corporation.
But many of them don’t know what to do next. That causes big headaches and stress because creative entrepreneurs get blindsided by things they should have known. It’s like getting into a car and not knowing where the turn signal is.
But give us a few minutes, and we will help you avoid that drama.
Avoid these problems with your LLC or corporation
The legal problems associated with not knowing how to run an LLC or corporation are real and cost money and time.
That’s money and time that should go into creating something new. We’ve seen legal clients come to us to fix these problems, but the easiest move is to avoid them altogether. It’s all about being proactive.
It’s essential to know how to run your LLC or corporation because you want to avoid:
❌ Getting your company suspended
❌ Losing limited liability protection
❌ Lawsuits and legal fees
❌ Founder disputes
❌ Tax problems
5 Tips For Running Your LLC or Corporation Without Legal Drama
So, here are 5 big mistakes we see business owners make that you can now avoid.
Let’s go:
Separate personal and business bank accounts.
Your business is a separate legal entity from its owner.
If you know one thing about business entities, this should be it. That means that your business entity should have its own bank accounts. Keeping business funds separate is vital. Failing to do this could jeopardize limited liability protection.
When you separate business and personal funds, you protect your business and yourself.
Sign contracts in the name of your business.
Every contract you sign for your business should be in the business’s name, not your name.
It’s easy to overlook this, but don’t. The power of having a business entity is that your entity takes responsibility for debts and legal obligations when everything is in the business name. If you put things in your name, you lose that power.
You protect yourself and your personal assets this way.
Complete ongoing maintenance filings.
You must stay in good standing with your state to keep LLC or corporate protections.
You stay in good standing by completing ongoing maintenance filings with the Secretary of State. Often, these are a formality and easy to complete. But if you miss them, your company risks being suspended or dissolved.
Ensure you know what filings (and other requirements such as a registered agent) your state requires and plan to complete them on time.
Update company documents to reflect changes in ownership/shares.
As your company grows, people may join or leave.
That’s part of the process. As the company’s owner, you should update your company documents (e.g., operating agreements, articles of incorporation, etc.) to reflect those changes. Not doing this or putting it off leads to legal mayhem.
Pay special attention to this when you are getting investors.
File company tax returns on time.
Your company should file a separate tax return.
When you start your company, talk to a tax professional to get this correct and maximize tax benefits. The bonus is that you can save big at tax time if you understand the tax implications of running a business entity. But make sure you get advice from a professional here.
Every well-run company relies on an accountant.
Run your company well and thrive
Setting up an LLC or corporation offers a fantastic springboard for business growth.
And while starting one is cool, the truly successful learn how to run it, too.
Start with these tips, and if you need more support, we are here to help you take action.
