Do You Need a LLC?

I get this question a lot and at least 75% of the time my answer is no. Don’t get me wrong, I get the appeal of going ahead and creating a legal entity for a new business -- it makes it official and that’s exciting! The problem with making it official is, well, then it’s official…

In the early days (or months, or sometimes years) of a new business you are often still trying to figure out your value proposition, what your offerings or products are, and how you are going to make revenue. When those things are unanswered it is best to spend your time and energy on that instead of on creating a legal entity. The legal entity itself isn’t necessary for you to have a business, but once you create one you’ll need to stay in compliance with your state’s rules and you’ll have to pay additional fees each year. Instead, I usually recommend that young businesses start out as sole proprietorships. And, on the plus side, you can be a sole proprietor for ages (note: a sole proprietor is an individual who works for themself and pays self-employment taxes)!

Once you have the business basics figured out, you are bringing in revenue, and you are ready to legally separate yourself from the business entity (this better mean you have separate bank accounts!) then it is time to make it official. 

• Want to know exactly when the time is right for your business? You may be a good fit for the Verdi Business Money Club. 

• Already have a legal entity, but not sure if you’re in compliance? You may be a good fit for the Verdi Business Money Club.

• Note: there are, of course, exceptions to this rule. Depending on the type of business you have you may need to create a legal entity in order to operate legally. If you’re in doubt, reach out! If I’m in doubt, I’ll recommend a lawyer to talk to :) 

XOXO