Creating your Corporation or LLC is the first step towards the success of your new enterprise. But, as every entrepreneur already knows, creating the corporation (i.e. “mailing it in”), is only the first step. Here are a few additional items you should think about after your Articles of Incorporation have been filed with the WDFI.
Get Good on Governance Right Away. The law may not require that you have a written document governing how your new company will operate – but you still need one. A written Operating Agreement\Bylaws will lay out, in detail, how the company will run, who will have what responsibilities, and how voting will be accomplished. At the outset of any venture, dealing with these critical issues is of paramount importance – mostly because they will be impossible to resolve later (read: once everyone is fighting).
Tax Number (EIN) & Bank Account. If you hired someone to file your Articles for you, they should have also gotten the Company a tax number (an Employer Identification Number/EIN from the IRS). Although your new Company may be a “pass through entity” and not file its own tax return (as is the case with many LLC’s) having its own separate tax number is required for multi-member companies, and highly suggested for single member entities. If your company is a corporation you need an EIN.
Part and parcel to the EIN – Oh my gosh! Please! Get a new bank account for your Company! Do not co-mingle personal money and business money – keep them separate. Your local bank will have options, and they do want to help.
Accountant & Financial Statements. Get an Accountant – unless you are one. Even if you are bootstrapping and have little available cash, there are accountants who are flexible with their fees – and the time your new business will require for setup, and ongoing support, will be low. DON’T SKIMP ON THE ACCOUNTANT! Once your “accounting” problems become “legal” problems, fixing them will be much more expensive and time consuming.
Learn to read financial statements and try to understand them. You may outsource a lot of your accounting functions like bookkeeping and tax filings, but the buck still stops with you. At the end of the day, you as the Founder will be forced to make decisions based on the financial situation of the company, and that information can only come from financial statements. Yes, I agree, financial statements are not fun to read…but they provide the objective facts every entrepreneur needs.