Business Structure

Deciding on Your Business Structure: LLC or Not
Important Disclaimer: I’m not a lawyer, and this isn’t legal advice. This chapter is for general information only. For legal questions, please talk to a qualified attorney.

Should You Form an LLC?
Many business owners ask, “Do I need an LLC (Limited Liability Company)?” The answer isn’t always yes. An LLC helps protect your personal assets if your business gets sued. But before deciding, think about these key points:

Understanding the Corporate Veil
The “corporate veil” is what protects your personal assets. But it can be broken if you mix business and personal funds or don’t follow the rules. If you’re worried about breaking the rules, you might want to hold off on forming an LLC.

Assessing Your Risk
Think about the type of business you run. If you sell handmade quilts on Etsy, your risk is low. But if you have employees driving company vehicles, the risk is higher. The more risk, the more important it is to protect yourself.

Evaluating Asset Protection
Do you have personal assets, like savings or property, to protect? If you’re starting your business with little to no assets, you might not need an LLC right away.

Choosing the Right LLC
If you decide to form an LLC, talk to a lawyer about the legal details. I can help with tax and cost considerations, but we’ll cover taxes in another chapter. For now, here’s some advice:

  • Keep it simple. You don’t need an LLC in Wyoming or Delaware unless there’s a specific reason. For small businesses, forming an LLC in your home state is usually best.
  • Single-Member LLCs. If you’re the only owner, you can set up an LLC easily through your state’s website or an online service.
  • Multi-Member LLCs. If your LLC has multiple owners, you’ll need an operating agreement. This document explains everyone’s roles and responsibilities. Some states require it, and it’s best to consult a lawyer.

Set It and Forget It
Once you decide on an LLC, it’s easy to maintain. Most states just require an annual report. This is usually a one-time decision—like setting up your business bank account. Make your choice, take action (or not), and move on to the next step in your business.

Need Help?
If you want help setting up your LLC, I recommend CorpNet. They make it simple and offer services like registered agents if you need them. Check them out here.

A Quick Warning
After forming an LLC, you’ll probably get a lot of official-looking mail. Some of it might say you owe money or need to file forms. Be careful! Many of these letters are scams or unnecessary. Read your mail carefully, and don’t assume every bill is real.

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