Our most asked question from other entrepreneurs is what should I do first when starting a business? Top on our list is getting an LLC.
While there are lots of things that are also essential to starting your business, this ranks high in priority. We say this because an LLC protects you, your family, and personal assets. Starting off, this may not seem important, but no one wants to be stuck in a sticky financial situation, when it all could have been avoided.
What is an LLC?
Limited Liability Company, okay so what does that mean? An LLC separates your business assets from your personal assets. Scenario: Let’s say you start a handyman business and are working in a clients house. Maybe you were having a bad day and went to install a chandelier and you dropped it on someone……..now you are getting sued. If you are a sole proprietor they can come after you for everything you are worth, meaning all your assets. Now if you have an LLC, they can only come after your business assets. We know this scenario seems extreme and is not likely to happen. But In reality, accidents do happen and you need a first level of defense. As a business owner, you are taking on all of the responsibility and should be thinking about all the worst case scenarios. Getting an LLC is your first layer of protection in your entrepreneurial journey. An LLC helps to protect you as you continue to grow and scale your business.
Other Benefits of Getting an LLC( besides protecting your assets)
- Your business comes off as being more legit. Now you can tell potential clients that you are a registered and legit business.
- Tax write offs( YASSS), this is so important in saving your business money. Your business is registered, so now you can write things off as a business expense.
Setting up your LLC
In general, it is very inexpensive( normally $100-$300) and the key is to use google to see what you need to do in your state of residency. Now you can pay someone to do this, but it is not necessary. When you google, look for the .gov websites. The website will walk you through all of the information needed to get your LLC. When filling out the information section you will come across a statutory agent, this is you. You are the point of contact for your business.
Getting an EIN( Employer Identification Number)
Once you file for an LLC, the government assigns you a number that is directly linked to only your business. Google how to sign up for an EIN number( look for the .gov) you will have to fill out some information and input your EIN number. An EIN limits the ability of fraud with your own social security number. All loans or applications applied for through your business are now separated from your personal life. Think of an EIN as your business’ social security number.
This process can seem overwhelming, but does not need to be. At the end of the day the LLC is your first line of defense and the EIN is your business social security number. We hope this video has helped to simplify the process!
Mark and Nicole
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