SLOW DOWN. Have a business idea? Think it will make money? Looking to start an LLC and hire an accountant? My advice is to slow down.
The most important question to ask yourself at this point: Is this idea currently making me money?
If the answer is yes, skip to Part 2. If the answer is no, read on.
Part 1 – Make Money First
Ideas are a dime a dozen. We day dream all the time about owning our own businesses and turning our great ideas into income streams.
Usually the conversation in our heads goes something like this: Oooh, that’s a great idea! I don’t think anyone has ever thought of this one before. I better make it a business!
Then we turn to conventional wisdom which suggests to start with a business plan, do market research, consult an accountant and secure an LLC. I am going to just come out and say, I’ve done this and it’s not necessary. You may go down this rabbit hole just to find out that it’s a bad idea or that someone is already doing it way better than you could. Save yourself the time and money. Just SLOW DOWN and try to make some money off of the idea before you go any further.
Do you need an LLC to charge for a product or service? No. Not where I am in Missouri at least. You can run a successful business directly off of your social security number. This is essentially how a single-member LLC will function in the end anyway.
Committing to an LLC too soon could cause problems later as you may want to rebrand or reorganize once you get into the flow of business.
Make some money first, then evaluate whether or not you will need an LLC.
I understand that you may have questions on how to make money without having an actual, legitimate business in place but that is content for another post. Email me and we can figure it out together.
Part 2 – Set Up an LLC
Maybe you have already vetted your idea or business service and you have proven that you can make money. Now you want to take action to protect yourself and your business. This is where an LLC can really help.
An LLC (Limited Liability Company) by definition is a corporate structure whereby the members of the company cannot be held personally liable for the company’s debts or liabilities. What does that mean in a nutshell? Well, it means you and I are protected personally if the LLC gets sued for all of it’s assets. It also means you can file a separate tax return for the business and you can open a separate bank account specifically for the LLC to make business exchanges.
The $50 LLC
Did you know that in Missouri you can secure a fully legitimate and operational business for as little as fifty bucks and a couple hours? That’s all it really takes. Sure, if you have extra cash laying around you could hand it over to an accountant or a service like Legal Zoom, but they won’t be doing much for you above and beyond what I will cover here.
Again, these instructions are for MISSOURI. I cannot speak to setting up an LLC in any other state because I have never done it. I also am not a legal representative or an accountant so take the following for what it is: Me telling you what has worked for me.
1 – Create an Account and set up a single-member LLC in Missouri using yourself as the “Registering Agent” (it costs $50 and is immediate).
I just set one up for “Nate Arnold Consulting, LLC”… nothing fancy there but I wanted something that was going to be evergreen and apply to a lot of situations.
2 – Register your LLC with the Feds to get an EIN number (you will need this to set up a bank account and to put on W9s when you earn at or over $600 with another entity). This step won’t cost anything.
3 – I set up an online business checking account at Capital One because they have a user-friendly iPhone app (that’s how I judge the quality of banks). It’s free to set up and they can get you enrolled in 1 business day.
4 – Sign up for Square for invoicing. I have used 5 or 6 different apps for invoicing, Square is by far the easiest. This obviously applies more to a consultant, but if you have a product business they offer a solid POS as well.
I run my entire business with these three accounts: Capital One, Square and Gmail.
Part 3 – Going Further
If you are rocking it with your new business or just someone who is naturally paranoid and likes to have all of their ducks in a row I would recommend setting up an Operating Agreement and working on a Business Plan once you are in operation (An operating agreement will be especially important if you plan on incorporating with other members). Why wait? In my opinion, you need to make sure you can make money before these even become relevant.
That’s it for now!