Well, it's been a while since last we met. Here's what's been happening this past month...
When last we met, we discussed the initial actions to complete and the order they need to happen.
First, we chose a state and set up our business entity.
Then, we applied for our EIN (Employer Identification Number. Some folks call it a "Tax Id").
Interesting bit of EIN info: the IRS form for that is the SS-4 form. The IRS replies with a document containing your EIN. That's the document you keep with your book of records to show your EIN and that it was officially issued by the IRS.
Where I ran into a delay was that my service provider - who helped me set up my entity - managed to scramble my e-mail address in their records. So, I was waiting for a document they couldn't get to me by e-mail, and they weren't sending it by snail mail, for some reason. So, that cost me almost the whole month of June.
The next step after that was registering the LLC in my home state. No big deal, but without the IRS document containing the EIN it, too, was delayed.
I now have the IRS Form in softcopy showing the EIN. This is saved in hard copy in the book of records for the LLC, also. Hard copies were sent to the state as part of registering the "foreign" entity doing business in my home state.
An important item: you may need to check with your local municipality to see if your entity will require a business license. According to my current location, my LLC does not require a business license given the business I intend to do with it, "General Real Estate Related Activities".
As we go forward attempting to build a credit history for the LLC, a key item is getting the LLC its own checking account.
Naturally, I thought this would be a simple situation, now that I have the EIN. I even went on-line to my chosen bank and filled out the information thinking, "O.k., type all this in, a few more clicks and I should be done."
Needless to say, it didn't work out that way. Oh, sure, I did all the on-line entries. Then, the last screen says, "You will receive ... in the mail in approximately two business days." Well, the packet from the bank arrived three days later. There was a whole checklist of items to be copied and included in the packet to be returned to the bank. Items such as the LLC's Articles of Organization and the Operating Agreement, among others.
So, I made all the copies, wrote out a check to cover the initial deposit, went to the Post Office and dispatched the return packet. That was on a Friday, two weeks ago. This past Friday, I noticed that my initial deposit check had cleared.
Now, I'll be watching the mail for the next package from the bank. I'm thinking it will include my initial checks and deposit slips and some form of "checkbook" including a ledger similar to a check register for a personal account. It may even look just like a personal checkbook. I won't know until it arrives.
Once I have the LLC's account number and routing number, I can go to Vonage and set up a company phone number.
My service provider for building business credit initially said that VoIP services weren't suitable for the purpose of obtaining commercial credit. The important item is to be listed with Directory Assistance where someone researching your entity can find it.
I'm now told that Vonage does provide Directory Assistance listing and so is suitable. This is good news because a "hard", land-line phone line would introduce additional complications.
If you've been following my saga since last August, you know that I'm coming up on a year of being out of the workforce. I'm now faced with a situation where it will very probably be necessary to rent this house out to avoid foreclosure. So, having the LLC physically tied to this location would complicate the situation even further. Just doing an address change for a fledgling entity is going to be complicated enough.
So, here are the steps which lie ahead in the days this week and the next two weeks or so:
- Set up a company phone line with Vonage, including automated attendant and voice mail.
- Begin setting up store ("vendor") credit with those businesses who report to Equifax and Experian business credit.
- Acquire some small items such as office supplies from my credit sources to the tune of $60 or so a month, payable Net-30.
- Track the LLC's business credit rating with Equifax and Experian. Prepare to work with my service provider to establish a Dun and Bradstreet account for the LLC.
- Set up a new entity - or use the existing LLC - to hold this property so it does not show up as an asset in my name and to limit my exposure to liability related to the rental property.
- Sign on with a property manager to provide services to my eventual tenant.
- Check with the HOA (yeah, I know...) to see what additional steps are necessary to put a tenant in here instead of me.
- Contact my insurance agent and let his office know of the change.
We'll talk again soon!
Take care - be well!
Much Success!
