Should I get an LLC?

[Izayah23]

Hi, I am 18 years old and new to licensing products. I have come up with a product and wanted to know if I should apply for an LLC before I start pitching my Idea to companies. And the most efficient way to do this, Thank you.

 

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[GIlman]

From my experience you shouldn’t form any business entity until you have to. Obviously “have to” is relative, since the reasons you see as needs will vary. But forming a Corp comes with costs from the formation and also tax preparation and renewals.

I never form a corporate entity from the start, I want to know the business is viable and profitable before I go to the haste and cost. You can form and roll a sole prop business easily at any point in time. In the past I have usually been over 50-100K revenue before I have formed a Corp for any venture.

 

[Ismail941]

You can decide it by yourself once you read The TMF

Part 6: Your Vehicle to Wealth: You
Chapter 22: Own yourself First

 

[jesseissorude]

I formed an LLC the instant I thought I had a good idea.
I wish I had just made sales and then formed the LLC once I was making a regular 1k/mo.

What I think you *should* do is open a second bank account that's ONLY for your business experiments. If you are in the US then you are already a Sole Proprietorship by default without having to file any paperwork. Form an LLC once your business bank account is growing month over month.

 

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[MitchM]

Someone please correct me if I’m wrong, but running a single person LLC can be taxed and treated similarly as a sole proprietorship - with the advantage of debt and other legal issues falling on the business instead of the individual (depending on the case).

I was already selling for a year when I opened my LLC, and it’s really only been beneficial in working with a few businesses that required those that they were working with to be incorporated.

 

[Mhinto]

I have been trying to license products for over a year now. Some of the first things I done were form an LLC and make a website. Neither seem have given me an advantage.

 

[ShamanKing]

Consult with your local CPA.

 

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[ravenspear]

From my experience you shouldn’t form any business entity until you have to. Obviously “have to” is relative, since the reasons you see as needs will vary. But forming a Corp comes with costs from the formation and also tax preparation and renewals.

I never form a corporate entity from the start, I want to know the business is viable and profitable before I go to the haste and cost. You can form and roll a sole prop business easily at any point in time. In the past I have usually been over 50-100K revenue before I have formed a Corp for any venture.

I agree with this.

I feel like a lot of people form an LLC as the first thing and it often ends up being an action fake.

 

[AgainstAllOdds]

From my experience, here's the answer to your question that very few people will agree with at face value:

You want to form an LLC right away and start aging it.

The cost to create an LLC somewhere like Wyoming is around $100. If you don't have an extra $100, then you have no business running a business. It's a drop in the bucket.

The company you register should have a basic name that can be transitioned into any idea. Something like IZH Group LLC, or anything that can be used for any idea. The LLC isn't your working name. It's the legal name. Your working name will be the DBA that you eventually use for whichever business/idea that catches on.

The reason you want to form an LLC right away: If you're going to have a real business, then you'll want a legally registered entity eventually. You're either going to run a business or not. It's better to go into the mindset that you will run a business.

Because you register the business today, you can start "aging" the corporation. For SBA loans and other bank loans, you typically need a minimum of "3 years in business". That's based on your incorporation date. If you incorporate today, chances are that you won't figure out what will make you money for years, but once you figure out what makes you money, you'll be able to leverage bank loans and grow faster since you'll have marked that check box.

Yeah, incorporating before launching is action faking and "pointless", but it's an action that will eventually open more doors and allow for more opportunities/options.