As I explained in Episode 1, it’s important to build systems and processes around what you love to do – systems and processes that you can teach others to manage so you don’t kill yourself trying to get to your dream life.
One of the first questions new entrepreneurs face when they start building their business foundation is “Do I need to set up a limited liability company or corporation right away or can I wait?”
Think of an LLC as a box, with your business and its pile of assets inside and your pile of personal assets outside. The business pile is owned by the LLC; the personal pile is owned by you.
This concept of separation of ownership is important in the event you or your business is sued.
So the question isn’t really whether or not you should set up an LLC, but when.
There are a number of things to consider when deciding at what point to set up your LLC. It’s not as cut and dried as you might think.
In this episode we’ll review the reasons why you might want to set up an LLC sooner rather than later:
- An LLC provides protection for your personal assets if your business is sued.
- An LLC provides protection for your business assets if you are sued personally.
- An LLC can help with branding and credibility.
- An LLC can help with developing a business mindset.
- An LLC or corporation is needed to get the tax benefits of a small business taxed under sub-chapter S.
- Setting up an LLC after your business takes off may be more difficult than setting it up earlier in your business development.
- A home-based business generally is not covered by homeowner’s insurance. You may need general business liability insurance and an LLC in case there is an incident where the award exceeds your insurance payout.
These are all considerations to discuss with your legal and tax professionals before setting up your LLC or corporation.
The CPA we recommend is Taryle Accounting, CPA, PLLC.
The office number is 480-948-9510.
Warren Taryle and his team have clients throughout the US.
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