You just submitted your Articles of Organization online. Congratulations—your LLC is officially formed!
Now you're a legitimate business owner. You can open a bank account, sign contracts under your company name, and tell everyone you're official.
Except... what actually just happened? What did you create? What are you now required to do? And what are all these terms people keep throwing around: registered agent, operating agreement, EIN, business license, foreign entity registration?
Filing formation documents represents about 20% of actually "forming" a business properly. The other 80% is a web of documentation, registrations, tax setups, compliance requirements, and operational systems.
This article walks through what actually happens when you form your business—and more importantly, what typically happens AFTER that filing goes through.
What Actually Happened When You Filed?
When you submitted your formation documents (Articles of Organization for an LLC, Articles of Incorporation for a Corporation), you:
✓ What You Got:
Created a new legal entity - Your business is now a separate "person" in the eyes of the law. It can own property, sign contracts, sue and be sued, completely separate from you personally.
Registered with your state - Your state now has you on record as an active business entity. They know you exist, and they'll expect annual reports and fees.
Got a filing date - This is your business's "birthday" and affects things like tax year, annual report due dates, and anniversary dates for various filings.
Established your legal name - Your business now has an official name that's registered and (theoretically) protected in your state.
What You DIDN'T Automatically Get:
- Tax ID number (EIN) - must apply separately
- Business bank account - must open separately
- Business licenses or permits - must apply separately
- Operating agreement or bylaws - must create separately
- Liability protection (not yet, not completely) - must maintain properly
- Tax election status - must choose separately
- Trademark protection - state filing ≠ trademark rights
The Document You Just Filed (And What It Actually Says)
Basic LLC Articles typically include:
- Business name - Your official legal name
- Principal address - Where your business operates
- Registered agent - Person/company to receive legal documents (required in every state)
- Management structure - Member-managed or manager-managed
- Organizer information - Who filed the documents
- Purpose - Usually generic "any lawful purpose"
What they DON'T include:
- Who owns what percentage
- How decisions get made
- How profits get distributed
- What happens if an owner leaves
- Voting rights
- Day-to-day operations rules
That's all in your operating agreement, which we'll discuss shortly.
The 30 Days After Filing: Common Post-Formation Tasks
Once your formation is approved, many founders begin addressing the following items. Here's what commonly happens:
Week 1: Essential Setup
1. Get Your EIN (Employer Identification Number)
This is your business's Social Security number. It's typically needed to:
- Open a business bank account
- Hire employees
- File business tax returns
- Apply for business licenses
- Apply for business credit
2. Create Your Operating Agreement (LLC) or Bylaws (Corporation)
This is where the real governance of your business lives. Yet many founders either:
- Skip it entirely ("we trust each other")
- Download a template and never read it
- Get it from their formation service and assume it's customized
Why this document is widely considered more important than your Articles:
Operating agreements typically establish ownership percentages, capital contributions, profit/loss allocation, voting rights, management structure, transfer restrictions, buy-sell provisions, deadlock provisions, and dissolution terms.
Co-Founder Scenario Without Operating Agreement
Two founders start 50/50. Six months in, one stops working but won't give up equity. Without an operating agreement with vesting:
- The departed founder keeps 50%
- They can block major decisions
- The remaining founder can't remove them without consent
- Investors typically won't invest with this complicated cap table
What vesting solves: If equity vests over 4 years, the departed founder only keeps the portion they earned (perhaps 12.5% after 6 months), and the rest stays with the company.
3. Open a Business Bank Account
Separate business finances from day one is commonly viewed as essential for maintaining liability protection.
What you'll typically need:
- EIN
- Articles of Organization/Incorporation
- Operating agreement (many banks require this)
- Personal identification
Week 2: Compliance and Registrations
4. Research and Obtain Business Licenses and Permits
State formation doesn't automatically authorize business operations. Depending on your business, you may need:
Federal level:
- Certain regulated industries (alcohol, firearms, aviation, etc.)
State level:
- Professional licenses
- Sales tax permit
- Industry-specific permits
County level:
- General business license
- Zoning permits
- Health permits
City level:
- Business operation permits
- Home-based business permits
- Signage permits
5. Register for State Taxes
Depending on your state and business type, registration may be needed for:
- Sales tax - If selling tangible goods or certain services
- Employer withholding tax - If you'll have employees
- Unemployment insurance - For employees
- Franchise tax - Some states charge annual franchise taxes
6. Consider Foreign Entity Registration
"Foreign" doesn't mean international—it means doing business in a state OTHER than where you formed.
Foreign registration may be needed if:
- You have a physical office in another state
- You have employees working in another state
- You're conducting substantial ongoing business in another state
- You own property in another state
Potential consequences of not registering when required:
- Fines and penalties
- Back taxes
- Inability to sue in that state's courts
- Contracts might be unenforceable
Week 3-4: Operational Setup
7. Set Up Business Banking and Accounting Systems
Beyond just opening an account, many founders establish:
- Accounting software - QuickBooks, Xero, FreshBooks
- Payment processing - Stripe, Square, PayPal Business
- Bookkeeping system - Methods to track income and expenses
- Receipt management - Digital system for expense documentation
8. Get Business Insurance
LLC formation doesn't provide complete protection. Many businesses also obtain:
General Liability Insurance - Covers customer injuries, property damage, accidents
Professional Liability / E&O - Covers mistakes in professional services
Property Insurance - Covers business equipment and inventory
Workers Compensation - Required in most states if you have employees
Cyber Liability - If you handle customer data
9. Set Up Payroll (If Needed)
If you'll pay yourself a salary (required for S-Corps, optional for LLCs), or have employees:
- Choose payroll service (Gusto, ADP, Paychex)
- Register for unemployment insurance
- Register for workers comp (if required)
- Set up state tax withholding
- Establish payroll schedule
- Determine classification (employee vs. contractor)
10. Make Tax Elections
Depending on your entity and goals, founders may consider:
S-Corp Election - File Form 2553 (typically must file by March 15 for current year)
83(b) Election - If you receive restricted stock with vesting, file within 30 days
Fiscal Year Election - Most businesses default to calendar year
What "Maintaining" Your Business Actually Means
Formation isn't a one-time event. You've created an entity that requires ongoing maintenance:
Annual Requirements
1. Annual Report / Statement of Information
Most states require annual or biennial reports updating:
- Current address
- Current registered agent
- Current officers/managers
- Any name changes
Due date: Varies by state (often anniversary of formation)
Cost: $50-$800+ depending on state
2. Franchise Tax or Annual Fee
Many states charge annual fees just for existing (as of this writing, subject to change):
- Delaware: Minimum $300/year franchise tax
- California: Minimum $800/year franchise tax (even if you made $0)
- Texas: Franchise tax based on revenue (threshold exclusions apply)
3. Business License Renewals
Most business licenses are annual and must be renewed.
Ongoing Compliance
4. Proper Record Keeping
To maintain liability protection, businesses commonly:
Keep meeting minutes - Document major decisions, even if sole owner
Maintain resolutions - Formal documentation of business decisions
Keep financial records - Separate accounts, clean books
Update ownership records - Updated cap table, any transfers documented
5. Annual Financial Tasks
Common annual financial obligations include:
- Tax returns - Federal and state
- Estimated tax payments - Quarterly for most small businesses
- 1099 forms - For contractors paid $600+
- W-2s - For employees (due by January 31)
- Sales tax filings - Monthly, quarterly, or annually depending on revenue
6. Registered Agent Requirements
Businesses must always have a registered agent with a physical address in their state of formation. If you move or your agent closes:
- Update immediately
- Most states charge $25-$50 to change registered agent
Common Post-Formation Mistakes
Mistake #1: Treating the Business Like It Doesn't Exist
Some founders form an LLC but don't operate like one:
- Never using the business name
- Mixing personal and business funds
- Forgetting to sign contracts under the business name
- Never documenting business decisions
Potential result: Court can pierce the corporate veil, eliminating liability protection.
Mistake #2: Missing the Annual Report Deadline
If a business gets administratively dissolved, owners may have to:
- File for reinstatement (with fees)
- Pay back fees and penalties
- Possibly lose business name if someone else takes it
- Deal with broken continuity for contracts, licenses
Mistake #3: Assuming Formation Completes the Process
Formation is the beginning, not the end. Some founders:
- Never get an EIN
- Never open business bank account
- Never file for required licenses
- Never create operating agreement
Then six months later they face challenges when they need to sign a contract, receive a cease and desist for operating without a license, have a dispute with a co-founder, or want to bring on an investor.
Mistake #4: Ignoring Foreign Registration Requirements
Operating in multiple states without proper registration can:
- Create tax liabilities
- Result in fines
- Make contracts unenforceable
- Block access to that state's courts
Mistake #5: Never Making Tax Elections
Entities have default tax treatment, but it might not be optimal. Missing deadlines for:
- S-Corp election (typically March 15 or 2.5 months after formation)
- 83(b) election (30 days after receiving restricted stock)
- Fiscal year election
Can potentially cost thousands in excess taxes.
The Hidden Costs of Business Formation
When budgeting for "forming a business," most founders think about:
- $50-$300 for state filing fee
- Maybe $500 if using a formation service
But the real first-year costs often include:
The formation fee itself is typically the smallest part of the actual cost. Costs vary widely by jurisdiction and business complexity.
When Your Business Structure Changes
Your initial formation isn't necessarily permanent. Common scenarios where businesses change or update:
Conversion from LLC to C-Corp
- Often happens when raising venture capital
- Requires state filings
- Tax consequences possible—consult CPA
Adding or Removing Members
- Requires updating operating agreement
- Possible state filings depending on changes
- Tax implications for transfers
Changing Management Structure
- LLC: member-managed to manager-managed
- Usually requires amendment to Articles
Electing S-Corp Status
- Just a tax election, doesn't change entity structure
- File Form 2553 with IRS
- Strict eligibility requirements
Moving to a Different State
- Can domesticate (change state of formation)
- Can form new entity in new state and merge
- Complex tax and legal implications
The Life Cycle of Business Entities
Understanding where you are in the business lifecycle helps clarify what to focus on:
Stage 1: Formation (Month 1)
- File formation documents
- Get EIN
- Create operating agreement
- Open business bank account
Stage 2: Setup (Months 1-3)
- Obtain licenses and permits
- Get insurance
- Set up accounting systems
- Register for taxes
- Make tax elections
Stage 3: Operations (Ongoing)
- Maintain separate finances
- Document major decisions
- Track income and expenses
- Comply with licenses and permits
- File required reports
Stage 4: Annual Maintenance (Every Year)
- File annual reports
- Pay annual fees
- Review and update operating agreement
- Renew licenses and insurance
- File tax returns
- Distribute K-1s (if applicable)
Stage 5: Changes (As Needed)
- Add or remove owners
- Amend operating agreement
- Change address
- Elect different tax treatment
- Expand to new states
Stage 6: Dissolution (If Applicable)
- File dissolution documents
- Pay final taxes
- Distribute remaining assets
- Close bank accounts
- Cancel licenses and permits
Common Post-Formation Practices
The following checklist reflects common post-formation practices that many founders follow. Individual circumstances vary, and consultation with qualified professionals is advisable.
Immediate (Week 1):
- Receive approval/certificate from state
- Apply for EIN
- Draft or customize operating agreement
- Open business bank account
- Move any business funds from personal to business account
Within 30 Days:
- Identify required business licenses
- Apply for business licenses
- Register for state taxes (sales tax, employer taxes)
- Obtain business insurance quotes
- Purchase necessary insurance
- Set up accounting software
- Make any time-sensitive tax elections (83(b), S-Corp if applicable)
Within 90 Days:
- Hold organizational meeting (even if just you)
- Document initial capital contributions
- Adopt operating agreement formally
- Issue membership certificates or stock certificates
- Set up payroll system (if needed)
- Establish bookkeeping processes
- Create system for tracking expenses and receipts
- Determine foreign registration needs
Ongoing:
- Keep business and personal finances completely separate
- Document major business decisions
- Maintain meeting minutes
- Track all income and expenses
- Make quarterly estimated tax payments
- Keep business licenses current
- File annual reports on time
- Review and update operating agreement as business evolves
What Many Founders Wish They'd Known
After working with many businesses, here's what founders consistently wish they'd understood from day one:
"I wish I'd created a comprehensive operating agreement from the start."
Generic templates often don't address specific situations. When disputes arise, clear rules that everyone agreed to when times were good become invaluable.
"I wish I'd kept finances separate from day one."
Trying to untangle mixed expenses months or years later can be extremely challenging. Starting clean and staying clean is much easier.
"I wish I'd budgeted for the full first-year costs."
The filing fee is just the beginning. Budgeting for the full cost of operating a legitimate business entity is important.
"I wish I'd made tax elections on time."
Missing an S-Corp election deadline or 83(b) election can cost thousands. These deadlines are typically strict.
"I wish I'd maintained proper records from the beginning."
An LLC doesn't protect you if you're not maintaining it like a real separate entity. Documentation is crucial.
"I wish I'd gotten licensed before I started taking clients."
Operating without required licenses can result in fines, inability to enforce contracts, and losing revenue earned while unlicensed.
The Bottom Line
Congratulations on forming your business! But understand that formation is typically the starting line, not the finish line.
You now have:
- A legal entity separate from you
- A structure for ownership and governance
- A foundation for building a real business
Many businesses still benefit from:
- An operating agreement or bylaws that actually governs the business
- Proper tax setup and elections
- Required licenses and permits
- Separate business finances and accounting
- Insurance to supplement entity protection
- Systems to maintain compliance
- Understanding of ongoing requirements
The formation documents filed typically represent about 20% of what's needed to operate legally and maintain protection.
The next 30-90 days of setup are often just as important as the formation itself. Doing it properly, documenting correctly, and maintaining consistently are widely considered essential.
The time and money invested in proper setup and maintenance is often viewed as less expensive than fixing mistakes later—or worse, discovering your LLC wasn't actually protecting you when you need it most.
Learn more about Business Formation for startups.
To ensure you complete every required step, see Registering Your Business: A Step-by-Step Checklist (Free).
Your choice affects what happens after formation — review Should Your Startup Be an LLC or Corporation?
Be sure to avoid common mistakes outlined in 5 Business Structure Mistakes Founders Make.