Setting Up as a LLC
- This topic has 7 replies, 4 voices, and was last updated 1 year, 6 months ago by
.
-
Posts
-
-
My biz is online courses, digital products (ebooks, printables) for adults. Mostly self-education related. What type of business does this fall into when I form my LLC?
-
Not exactly sure what you’re asking. Are you asking about whether you need an LLC or not?
If so, my usual suggestion is to keep things really simple in the beginning. Which means… as little legal paperwork as needed. You do not need an LLC to sell stuff online. And it does bring in additional paperwork to create one. So, assuming you’re in the early stages, I would just continue as a sole proprietor. Perhaps file a DBA (doing business as) if you want a trade name. Then, get some sales going. When you’ve got proof that you have a product/market fit, go ahead and create the LLC.
Also, if and when you do the LLC, give it a generic name this way you can pivot things to other ideas without necessarily needing to change the name of the LLC.
-
Thank you David. I am currently set up as a sole proprietor with a DBA. I was looking into forming a LLC and wondered which category my biz would fall into.
-
Ah. Just choose whatever is closest. Doesn’t really mean much what you choose.
-
-
I will add that I had set up an LLC with some online LLC outfit, then I found out I did it wrong. The way I did it, it creates K1 statements and my husband and I each get one and have to report on our taxes. I think it was a “partner” LLC – I was thinking I didn’t want to exclude my husband, so we would be together as “partner.”
I did’t do too much with it, so showed 2 years of no profit, but BIG accountant bills. My accountant said it was better to change the type of LLC after not showng profit. However, I am about to pivot and am bringing in my daughter-in-law on some business and it may end up being the right move.
I can’t say enough to go to a real lawyer to begin with and discuss how you expect the profit sharing to happen and who would inherit it and silent partners and such. It’s really 1 of 2 choices which type of LLC, so just get it right to begin with. You will also need to draw up terms or something that spells out what you expect of the LLC – it really gets you thinking. Again, go to a lawyer.
-
One more thing, my daughter-in-law is a paralegal with a law firm. You wouldn’t believe all of the online legal services mess that they have to deal with because people started there first instead of with a local lawyer. I’m not advertising for lawyers, just providing some insight.
-
I think the complication there is that you did it as a partnership. That does make things more involved. I think, for most people, creating a simple LLC can be done solo without a lawyer. And in terms of accounting, again…. for most people, the taxes are incredibly straightforward and can be done on your own.
Just my 2 cents. And worth about what you paid for it. 😉
-
All of the above said…business formation is not that expensive, and you can usually find a local attorney that can help answer your questions for a reasonable price and it can save you a lot of hassle to just do it right in the first place. If you are doing a simple LLC then it shouldn’t cost more than $100 and then you’ve got somebody on your side making sure you’re doing things right. (At least in my area – some parts of the country could obviously have a much higher number, but it never hurts to shop around and ask.)
-
- You must be logged in to reply to this topic.