Forming an LLC is a real milestone. You’ve got a legal business structure, liability protection, and something that feels official. But the paperwork you filed with your state was just the first step. What you do in the next few weeks determines whether your LLC actually functions like a business or just sits on paper.
Three things need to happen before you start invoicing clients under your new business name. None of them are complicated, and all of them will save you headaches later.
1. Get Your EIN From the IRS
Your Employer Identification Number (EIN) is your business’s tax ID. Think of it as a Social Security number for your LLC. You’ll need it to open a business bank account, sign contracts, file taxes, and send W-9s to clients who need to issue you a 1099.
The IRS issues EINs for free through its online application. It’s a relatively simple, self-guided process, and while plenty of parts of running a business are worth outsourcing, this is one task you can handle yourself at no cost.
One important thing if you operated as a sole proprietor before forming your LLC: any EIN you had under your sole proprietorship cannot transfer to your new legal entity. Your LLC is a separate legal structure, and it needs its own EIN. Old EINs tied to a prior sole prop should be considered inactive. Don’t use them for your LLC, don’t list them on new W-9s, and don’t assume they carry over. Get a new one for your LLC and start clean.
A quick note on timing: Get your EIN before you do anything else on this list. The steps that follow depend on it.
2. Open a Business Bank Account
Once you have your EIN, open a dedicated business bank account in your LLC’s legal name. Most banks require your EIN and LLC formation documents to get started, so plan to have copies ready, whether you’re applying online or in person.
Why a personal bank account used for business doesn’t work
A common workaround is setting aside a personal checking account exclusively for business transactions. It’s understandable, but it doesn’t accomplish what a business account does.
A personal account, regardless of how it’s used, is your personal asset. A business bank account is held in your LLC’s name and is a business asset. That distinction matters for your liability protection. Your LLC exists to create a legal separation between you and your business. If your LLC were ever named in a lawsuit or faced a creditor claim, a personal account doesn’t carry the same protection a properly titled business account does. The liability shield depends on that separation being real, and that means the money needs to move through accounts that reflect it.
Beyond protection, keeping business finances in a dedicated account makes your books cleaner, your tax prep more straightforward, and gives you a clear picture of how the business is actually performing. It also signals to clients that they’re working with a legitimate business entity, which matters more than it might seem early on.
3. Update Your Clients
This step is easy to overlook when you’re focused on the legal and financial setup, but it’s one of the more consequential items on this list. Getting it right reduces your exposure to IRS matching issues down the road.
When a client pays you and issues a 1099, the IRS matches what’s on that form to what you report on your tax return. If your client files under your old personal name and Social Security number while you’re now reporting income under your LLC and EIN, the records don’t align. That mismatch can trigger notices and extra work you don’t want. Updating your clients now keeps those records clean before any discrepancies take root.
- Send updated W-9s. Under current federal law, clients who pay you $2,000 or more in a calendar year are required to issue you a 1099-NEC. That threshold increased from $600 starting with the 2026 tax year as part of the One Big Beautiful Bill Act. Your W-9 tells clients who to make that form out to, so yours should now reflect your LLC’s legal name and EIN rather than your personal name and Social Security number.
Send updates to current clients before they generate paperwork with your old information.
A few things worth knowing: some states set their own 1099 reporting thresholds below the federal level, so the $2,000 floor may not apply everywhere. And regardless of whether a client is required to issue you a 1099, all of your income is taxable. The threshold only determines who has a reporting obligation, not what you owe.
- Update your contracts. Contracts signed under your personal name or a DBA may need to be updated to reflect your LLC’s legal name. At minimum, make sure new contracts going forward are executed under the LLC.
- Update your invoices. Your invoices should show your LLC’s legal name, with payment directed to your new business bank account. If clients have your personal account saved, let them know about the change before it creates confusion.
Why This Order Matters
EIN first, then bank account, then client updates. You can’t open a business account without an EIN, and you can’t direct clients to a business account you haven’t opened yet. Each step sets up the next one.
| Step | What You Need | Time Required |
| Get your EIN | SSN, basic business info | ~5 minutes |
| Open a business bank account | EIN, LLC formation documents | Varies by bank |
| Update clients | New W-9, updated invoices and contracts | Depends on client count |
What Comes Next
These three steps get your LLC operational. Where you go from here depends on where the business is headed.
- If your business is growing and you plan to keep it that way, you’ve already laid the groundwork for a future S Corp election. An S Corp election is a tax status you can layer onto your existing LLC once the business reaches a certain level. It doesn’t change your day-to-day operations, but it can reduce your self-employment tax obligation at the right income level.
- If you’re earlier in the journey or the math isn’t there yet, staying as a single-member LLC is the right call. An S Corp election makes sense only when the income level and circumstances support it. Some states also have tax treatment that makes the election less advantageous, so geography factors in too.
- Either way, the foundation you’re building now matters. Clean separation between personal and business finances, accurate records, and the right legal structure are what make future decisions, including whether and when to elect S Corp status, much easier to navigate.
Collective is built to support single-owner, service-based businesses at every stage of that path, from bookkeeping and formation to payroll and tax filings.
