Getting Your Business Up and Running: Post-formation Matters  

schlau rogers estate business planning attorney laguna beach

It's Not Personal, Sonny. It's Strictly Business.

As discussed in our previous blog post, forming an LLC can be simple, but deciding issues related to tax, liability, management and capital concerns are best left to an attorney. But figuring out and implementing a formation plan does not mean you’re ready for business. Once the LLC is formed, there are several things to do before it can begin conducting business. That will be our focus in this blog post.

Key Takeaways

  • Some corporate practices are beneficial to LLCs
  • Preliminary matters of concern include obtaining a tax identification number, licensing and permits, as well as deciding whether to use certificates
  • Consult professionals to determine how your LLC should be taxed and tax obligations associated with that designation


One of the main reasons clients prefer LLCs over corporations is the prospect of fewer formalities is attractive. However, one corporate practice that we recommend LLCs appropriate and implement in their internal management is the keeping of minute books and ledgers.

Although typically a corporate practice, LLCs should keep minute book as a matter of good governance and organization. However, it’s important to understand that the Revised Uniform Limited Liability Company Act (“RULLCA”) in California expressly states that failure to hold regular meetings will not be a factor in determining personal liability of manager/members despite limited liability protection unless the LLC’s Operating Agreement contains provision that regular meetings must be held.

So, our recommendation that you should keep minutes does not mean your Operating Agreement should contain a provision that you have to hold regular meetings. This at best will unnecessarily increase the formalities your LLC was designed to avoid and at worst will essentially eliminate your limited liability and expose personal assets to company debts. For this reason, we recommend against including a provision to hold regular meetings in your Operating Agreement.

RULLCA also gives us a specific set of records an LLC is required to maintain, either in writing or in any other form capable of being converted into clearly legible tangible form:

  • an alphabetical list of the names, addresses (business or residence), contributions, and shares in profits and losses of each member and transferee;
  • if the LLC is manager-managed, a list of the names and addresses (business or residence) of the managers;
  • a copy of the articles of organization and any amendments thereto (as well as any related powers of attorney);
  • a copy of the operating agreement and any amendments thereto (as well as any related powers of attorney);
  • copies of the LLC's federal, state, and local income tax or information returns and reports (if any) for the six most recent fiscal years;
  • copies of the LLC's financial statements for the six most recent fiscal years; and
  • the LLC's books and records (as they relate to the LLC's internal affairs) for at least the current year and past four fiscal years.

Your minute book will normally be the place you keep copies of all formation documents, member agreements, resolutions, and other organizational documents.

As an alternative to, or in conjunction with, storing physical versions of the aforementioned documents in an official minute book, we recommend that your LLC create electronic copies of records and keep them in a secure, searchable database online. We recommend that you use a company that keeps your documents private and secure, and also guards against the possibility of a server crash by storing data on multiple servers simultaneously.


Beyond our recommendation that you keep a minute book and ledger, there are certain things you’ll need to take care of before your business can officially and legally begin operations. The first step in making this happen is apply for a taxpayer identification number.

A taxpayer identification number (TIN) is required because this allows the IRS to identify your business to collect taxes. You’ll also need a TIN to transact basic business like opening a bank account.

A TIN can be your own social security number (SSN) for a single member LLC when its tax status is designated as a disregarded entity, it does not have any employees, and it meets all other IRS requirements. For more information on whether an LLC is eligible to use a single owner's SSN, contact us.

An LLC with multiple members or any other tax status on the other hand must typically obtain a TIN by signing up for an Employer Identification Number (EIN). You can get an EIN in the following ways:


In general, each LLC will have to apply for and receive a business license to operate. This license will be required by your local government. Depending the type of business you’ll have, there may be business-specific licensing requirements levied by your state and/or municipality.

You can find some guidance as to which license you may need here: Governor's Office of Business and Economic Development: Permit Assistance and California Department of Consumer Affairs.

But before you apply for a license or permit, you should consult with an attorney so you don’t unnecessarily acquire a useless license and begin operations without the authority to do so. If you’d like to handle the process yourself, you can check the websites noted above and also contact the county clerk and the clerk where your business will operate. They should be able to tell you all the licensing that you’ll need to start things up.

As an aside, there are additional requirements for LLCs that will operate in a state other than the state where the company is formed. If this is the case, contact us for more details.


If you’ve googled “how to form a company” you’re probably familiar with membership interests. Online formation companies love to print out certificates of interest to make things “official.” But you should know the use of a certificate doesn’t make things any more official than they already are after you’ve properly formed your business.

In fact, it’s entirely up to you whether to use certificates. RULLCA does not require a certificate of interest to evidence any ownership interest in the LLC (Cal. Corp. Code § 17705.02(d)).

While online formation companies are all about the use of certificates, LLCs actually do not issue certificates for membership interests very often. This is all taken care of in your organization documents.

If you do want to make member interests certificated, know that this is usually mentioned in the Operating Agreement. In fact, if you go to a bank with a certificated interest to pledge your interest for a loan, they’re going to want to see if the YOU Operating Agreement indicates the interests are certificated.

Also keep in mind that any transfer restrictions you impose on member interests in your Operating Agreement will take precedence over a transfer if the transfer is made with knowledge of the restriction. For that reason, it’s important to reference the Operating Agreement on any certificates if you choose to use them.


Tax considerations are the most common reason people like to say they’ll form an LLC instead of a corporation if they start their own business. This is because even though an LLC is a recognized type of business entity under California law, LLCs are not taxed themselves under US federal income tax law.

For federal income tax purposes, an LLC is typically treated as a pass-through entity. This means that for federal income tax purposes, income flows through the entity to the members and therefore the members are taxed at the individual level only. This is true if:

  • A single-member LLC is a disregarded entity and treated as a sole proprietorship.
  • A multi-member LLC is treated as a partnership.

That said, an LLC may choose to be taxed as a C-corporation or S-corporation for federal tax purposes. For reasons as to why you might want to choose to be taxed this way, contact us and we’ll coordinate with your tax professional.

As for state taxes, California follows the federal tax classification regime. This means that an LLC registered with the SOS that is not taxed as a corporation must pay the Franchise Tax Board an annual tax of $800 and an additional fee based on the LLC's annual income. An LLC that is taxed as a corporation determines its California income under the Corporation Tax Law.

To minimize state taxes, California offers a various tax credits that enable companies. You’ll find those here: California Tax Service Center: Tax Credits, Deductions and Taxable Income.

Again, consult a tax professional in conjunction with your legal counsel to address these concerns.


In addition to the above, there are numerous other matters that may be of concern for your particular business including things like employee incentive and capital raising considerations. Sidebar: a great resource for capital raising is the LendEDU Small Business Financing Guide for California companies, which you can find here.

There are also business-specific issues that may come up at the outset of business operations. For more information, contact us and we’ll be happy to help. Schedule a strategy session today.

Matthew Schlau is a co-founding principal of Schlau|Rogers and an estate and business planning lawyer practicing in Orange, San Diego, Los Angeles and Riverside counties. He is a husband, father, blogger, crossfitter, and really good at helping people achieve their goals.

At Schlau|Rogers, we do more than just estate and business planning, probate and trust administration. Our objective is to provide individually-tailored plans that allow you the opportunity to reach your goals, all while minimizing headaches and risk, and maximizing peace of mind.

On our blog, you'll find useful information about estate and business planning, probate and trust administration, as well as some tidbits on personal finance, taxes, and anything else we think will help minimize headaches, worry and risk, all while maximizing peace of mind.

You can find Matthew here:

Disclaimer: This blog is a resource for educational and informational purposes only and should not take the place of hiring an attorney. Using this blog does not create an Attorney-Client relationship between you and Schlau|Rogers. Individually-tailored legal advice is not provided within this blog. Instead, this blog is a resource designed to make you aware of various legal issues. Your use of this resource is subject to our Terms and Conditions, which you can read here. If you would like to hire an attorney, you can get in touch with us at (949) 873-0662 or request a strategy session.